Is it difficult to house break a puppy that has been paper trained?

No, not at all. The easiest way to do it would be to move his paper a little closer to the door every day, and eventually move the paper on the other side of the door - outside. If he has any accidents in the house, just make sure if you catch him in the act, you pick him up and run him outside. It'll take time and patience, but eventually he'll get the hang of it. :)

From what I've heard, it's monstrously difficult to teach a Shih Tzu anything. You could try, but don't punish the dog for continuing to use the papers, or you'll be sorry.

Remember to crate the dog whenever no one can watch him; he's a baby. Think of a human 2-year old.

Ashley has the right idea. Just don't forget to reward and praise him when he does go outside, that way he realized what he's doing right.