We put shredded paper in our compost without noticeable ill effects, for much the reasons you are thinking about it (ie, it's readily available). The laser printer toner is probably better thought of as plastic than ink, and is unlikely to be biodegradable. It's apparently not toxic, it's just fine, inert particules (before it's printed). I suspect we're adding to the plastic content of our soil, but since there's so much plastic en our environment already I'm not sure that paper is going to affect the amount by much.
It does help dry the compost, and it seems to work as well as adding dry, woody material in similar amounts by weight (ie, you need more volume of shredded paper). It breaks down at about the same rate, possibly a little faster.
I've never bothered about the size, I've just taken bags from whatever shredder I can easily access. My main concern is to avoid shredded where people have been feeding plastic into them, either directly by shredding CDs and DVDs (most shredders will do that), or indirectly via plastic folders or cover sheets. I also try to avoid too much glossy paper, since the clay content is high and it's more likely to have other stuff in it to make it accept ink even though it's shiny.
