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It helps you get an idea of their quality. For example, I'm more likely to hang onto a B papered gelding than a C, because I consider it a rough estimate of their quality. If I breed a pasture and go through the colts I'm interested in most first, I may find the one I intend to retain (best combination of color and quality) before I paper everyone else. If I geld the extras then I can quickly paper them and decide which to toss in the auction and which to keep for showing. It's free because it doesn't really assist you with breeding, and - unless you know what kind of PT the parents produce - it's a pretty rough idea of ability. If you really want to know then do PT and consistency testing (I poor boy it).

Mare papering is dependent on offspring quality - the algorithm used wouldn't work on a spay in the same way. Gelding and stallion papering are (to my knowledge) exactly the same.

You can already paper spayed mares.

Remember, just like with foundation stallions, nearly all foundation geldings will paper C. There are very few instances where you can have a male foundation horse paper better than C, or have a female foundation paper better than yellow or red.

Yep, they need to meet the rules for mare papering but if they do mare papering does not care if they are spayed or not.