And then it comes down to reputation and trust.
No it doesn't. It's an objective fact that they are lying about the security of their wallet, therefore any other features of their reputation are almost entirely irrelevant.
It's kind of ironic that bitcoin, which heavenly relies in the faith of the users also requires lots of trust when dealing with 3rd party business or merchants.
No it isn't. To produce a paper wallet you don't need to trust anyone at all.
You only have to trust anyone if you make that choice. It's a trustless payment system and that has no relation to the people that a user decides to deal with.
even hardware wallet might be risky if the manufacture/developer decide to make backdoor.
True, but hardware wallets are somewhat different because their software is usually open source. I would not trust a hardware wallet with closed source code.