+1, definitely cool. I think you'd have to wax the paper somehow first...hmm...also i think adding honey to it for sweetener would be cool, and maybe even higher level snocones than we could buy now!
Maybe even tie this to the different butterflies suggestion: http://www.glitch.com/forum/ideas/24536/
If we had different colours/flavours of butterflies, a butterfly could be the 'secret ingredient' for a snow cone. Butterflies also take honey to make, so they're sweet!