Given the amount of prints done at our offices (and costs of replacing the toner) this can become cost effective very fast.
I wonder how/if they can add color
Staples has InkJet paper online for $8.79 (500 sheets per ream). That's $0.0156 per use (single sided print).
If my assumptions are correct, that sounds cost effective to me.
I'd be more worried about the paper getting damaged before you can get all 1000 prints out of it. I'd hope the paper is sturdy.