Attempted this today after finding damaged paper and damaged red pen. Can confirm it doesn't work. Not sure if it's related, but selecting "read note" from just about every piece of paper I've found does nothing.

Easy fix: Make any loot within a certain radius of log-in position not render for players that just logged in. This would also encourage more of a raid mentality, making it important to get out of hot zones before logging out. Although, this really shouldn't be addressed this early in development. Being able to quickly get your hands on lots of loot actually makes the bug testing process allot smoother and easier.