As already mentioned, this doesn’t seem to work in PaperUI (not only for the label shown in PaperUI, but the label isn’t transformed at all as it would be if defined via .items file).
A little off-topic:
Seems that item creation is rather different anyway when comparing configuration via PaperUI and .items file. When comparing results in the REST interface (besides the state and group):
- PaperUI item:
{"link":"http://192.168.1.3:8080/rest/items/Thermostat_Mode","state":"0","editable":true,"type":"Number","name":"Thermostat_Mode","label":"Einstellung Thermostat: [MAP(thermostat_mode.map):%s]","category":"Switch","tags":[],"groupNames":["gEinstellungen"]}
- .items file item:
{"link":"http://192.168.1.3:8080/rest/items/Thermostat_Mode_Test","state":"1.0","transformedState":"EIN (Zeitplan)","stateDescription":{"pattern":"MAP(thermostat_mode.map):%s","readOnly":false,"options":[{"value":"0","label":"Off"},{"value":"1","label":"On"}]},"commandDescription":{"commandOptions":[{"command":"0","label":"Off"},{"command":"1","label":"On"}]},"editable":false,"type":"Number","name":"Thermostat_Mode_Test","label":"Einstellung Thermostat:","tags":[],"groupNames":[]}
I just tried to configure all my 2.x items via PaperUI, as I wanted to use openHAB 2 technologies and advantages (avoiding configuration issues, single source of truth) as discussed in Next generation design : Ideas & Discussions. But I think I take the effort and go back to use .items files, since PaperUI has too much limitations up to now, which I didn’t expect.
I know that PaperUI is going to be substituted by a new UI in the future, and I really hope this can be handled better then, but I don’t think I can await the changes without using .items files 
.