Matt, welcome to the forum! That's a good question. During the postwar era, paper was commonly used as electrical insulation in many applications. I'm no expert on postwar locomotives, but your hypothesis does appear plausible to me: that it could have been factory applied to prevent the light bracket from shorting the motor circuitry or from rubbing the insulated wires.
Others more familiar with the older locomotives will probably have a suggestion or two about working around this.
