Is there any ATM that has the option of printing a paper wallet in advance?
no, and it is not clear what for this is needed?
If somebody just wants to generate a bitcoin address without installing any wallet software - then why it is related to Bitcoin ATM at all?
In your scenario - this person will not buy from the ATM, just generate address, take this printed receipt and walk away with this paper wallet.
Second, even if such a feature will be introduced in ATMs say for some fees. But the security as mentioned above will definitely be compromised at some moment. You should not trust any external service to generate private keys for you, either it is some site, ATM or anything else.
This is why whenever you purchase from Bitcoin ATM not to your address directly - it is recommended to do this asap and not storing funds on the printed address.
Even better would be if the private key would come hidden as part of a scratch card. This would make them look much better and make them much more secure.
ATMs definitely can not produce scratch cards. So they will be created somewhere else and then have to be filled in the ATMs. All this adds one more chain that can be compromised.