1. Where is the offline mode checkbox when logging in? I don't see it.
The offline checkbox was removed the reduce clutter, the tutorial need updating. To use offline mode now:
1) login to your wallet once.
2) Disconnect your internet and refresh the page.
3) Login again and you now in "offline" mode.
4) Generate some keys, print the paper wallet but before you connect to the internet again make sure you clear the browsers cache fully (or it nullifies the point of offline mode).
Alternatively you can generate a paper wallet at https://www.bitaddress.org
and import the addresses as watch only ones without bothering with offline mode. However I find that the QR Codes on bitaddress.org are too small to scan with the built in webcam reader.
2. What is the process to import from a paper backup, should I lose my blockchain wallet access or something happens to Blockchain.info? Are the private keys the greyed out smaller font keys listed on the paper backup?
Yes the private keys are the small grey text and also embedded in the QR Code. If blockchain.info was offline the easiest way to restore the balance is probably to import them into Mt.Gox or instead of typing scan using a desktop app like http://www.dansl.net/blog/2010/desktop-qr-code-reader/