I have not done it but have read somewhere in the past of it being done to be able to use some undersized bullets. There is also a thread over on the cast Boolets forum about it. here is a link, (You need to Login or Register to view media files and links)
Maybe you can find some answers there to your questions.
Sam

Are you proposing say patching 0.452 pistol bullets for using in a 45 caliber (0.458) rifle? I don't expect that to work out. Even with patching for Nitro (meaning groove diameter bullets) the complete patched bullet would be 0.458 and you would need paper of 0.0015 thickness for two wraps.

Another problem is a jacketed bullet, regardless of diameter is that it is not going to "bump up" like a lead bullet and push the paper into the grooves so it is cut and releases from the bullet at the muzzle. If it does not fall off immediately it will affect the consistent flight of each bullet fired so no consistency and no precision.