Paper crafting is vital in children’s fine motor skill development, problem-solving abilities, and emotional well-being. However, safety concerns related to paper crafting, e.g., gluing and cutting, might hinder children’s creative exploration. Moreover, paper crafting only sometimes accommodates making mistakes, e.g., wrongly cutting paper. In this paper, we explore how virtual environments can facilitate safe and error-friendly paper crafting by proposing two interaction techniques based on (1) physical proxies and (2) hand gestures that accommodate paper coloring, gluing, and cutting. To investigate children’s virtual and physical experiences with paper crafting, we conducted a controlled lab experiment (N=12) consisting of a predefined task and free play. Our results indicate that physical proxies and gestures facilitated a safe and enjoyable experience to express creativity. Moreover, children successfully performed paper crafting using the proposed techniques and found it more engaging and fun than physical paper crafting.