After the recent Papers update to 3.4.12 (550) which didn’t fix Scrivener 3, I emailed Papers support on the issue I had open with them, detailing the simple .plist fix as well. In reply they tried to sell me their paid Readcube app instead. 
I’m not sure they’re actually going to add support for Scrivener 3, or indeed any upcoming Microsoft Word 365 updates (I’m on the Insider Slow ring, the build of which Papers no longer recognises, at least for me…)
I’m a little puzzled they tried to sell you ReadCube as this doesn’t even support Papers - it’s Word only as far as I can tell. Was it the upcoming merged Papers/ReadCube that they were suggesting?
Nope, the links they provided were to their current Readcube Desktop offering, and in the email they said:
Frankly I was shocked and dismayed they suggested it and replied as such. I have hundreds of thousands of words written in Scrivener that I was hoping to export to Word and then generate, but now Papers doesn’t work in either program… (though I guess this is my fault for being on the bleeding edge 
)
This is so frustrating. I’ve built an entire dissertation using Scrivener with Papers 3 and now Papers 3 is worthless. Is there a work around that gets the citekey function of Papers 3 back in play? I’ve never messed with the code of a software package so go easy on me.
Shouldn’t the easiest way be to go back to Scrivener 2 until the thesis is done?
I know it does not help you, but at least you have saved me by mentioning your process. I am planning to do the same, but should absolutely not update Word anymore, I’ll make sure to turn off automatic updates. I am running version 15.40 and it works there, it that is of any help. And indeed, roll back to Scrivener 2 until you have finished the thesis.
There is a fix. But it does have a side effect. You won’t be able to restart Papers. If you do need to restart Papers, for whatever reason, you first have to delete the line I’ll tell you to add here. Mind you, I haven’t tried it myself, but since it comes from Papers support, I doubt it won’t work
You have to edit the AppSupportInformation.plist file that you find in
/Applications/Papers.app/Contents/SharedSupport/Citations.app/Contents/Resources
Add this line
com.literatureandlatte.scrivener3
It should work after that
That solution was proposed on this forum, so it is interesting that Papers support now provide that as an option. It is basically a hack of their own software. I thought it used to freeze Papers after you did it, but on trying it now it is still working. Could be done in a little script I suppose that copies the original plist back, starts Papers and then modifies it.
You can build a script for launch Papers 3, wait few seconds and then copy your modified version of AppSupportInformation.plist
Also, I’ve created an automator service that restore the original version of AppSupportInformation.plist before quit. To prevent an improper exit of Papers 3 I’ve overwritten the Command+Q shortcut to invoke this service. It’s mandatory to assign a new shortcut to regular exit (the standard Command+Q), in my case I’ve chosen Alt+Command+Q.
I hope this workaround can help you.
AFAIK it is only Magic Citations that is broken. You can still go into the open Papers app, copy the citation in Papers format and paste it into Scrivener. Once you export into Word, you can still format your citations using Papers. I suspect that this is as good as you are going to get out of Papers now. Its why I jumped to Bookends.
Best of luck.
Thanks for that suggestion, however in my library (and perhaps this is not right) the citekey that I copy from papers directly (copy as > papers citation) , is not always the same as the citekey that is produced by Citations. Thereby the Citations app is a super convenient way to search, more so than the search in the Papers app itself.
I appreciate your migration to Bookends. That has been suggested by others and seems like a good idea. I am also considering that, but not right now.
If you go to Preferences->Papers and set Drag Papers as: to Magic Citation, then the citations that you copy with e.g. CMD+C will be the same as those produced by the Citations.app. So doing a manuscript scan after exporting from Scrivener to e.g. RTF, still works.
Also scripts and automator actions sound like a great idea to get Citations working in the interim(henceforth?), thanks @barbudo.
In my ongoing support thread with Papers Support, after advising them that Readcube Desktop was not an appropriate solution, they offered me a refund for Papers. (I told them I wanted them to keep their money and make the fix, but I remain unoptimistic…)
I had no idea that the fix that Papers support suggested was actually originally from this forum! 
It seems to me that that’s another sign that the app may be on shaky grounds, for whatever internal reasons. I used to use Sente and for many years it went well. And then it became fundamentally undeveloped and barely supported. That’s when I switched to Papers. Actually before that I looked into Zotero and ReadCube, and for a very good reason. They seem to be solidly backed up and unlikely to dissolve. But admittedly Papers looked better, and better than Bookends too, for me. And that’s why I decided to switch to it. I still like it, and I hope this is not the beginning of something I have already seen with Sente…
Thanks - yes, that is the same as copy as, but quicker. The problem is probably another bug, as I have citekeys and citekeys. In the visible paper record, the citekey is something like perlin1985image and this is what I get when I use copy as, or CMD+C as you suggest. But when I use Citations, it comes out as something like Perlin:1985wf. The last one is actually one that is recognised in the manuscript scan, the first is not.
So, I think your solution would be workable, as long as my citekeys were properly formatted. Still, Citations is better at searching, as you can search for words in the title or authors, it does not matter.
Well, I think they probably knew how to do it, but it was also suggested on this forum and because of that it has probably been brought to their attention through various emails to their support person.
I agree that Papers has probably the Maciest looks, which, for a program that you use a lot does make a difference. But I wish I had not been so hung up on it. And I think it will suffer the same fate as Sente. In fact, support is already minimal to nothing and it is being phased out to be replaced by a new ‘hybrid’ between Papers and Readcube.
Today I received an email from Papers support saying that they were working on implementing the .plist fix, although they do not know how long it will take for that release to be pushed out.
Hopefully we’ll all be back up and running soon !
I would not hold my breath. There is a highlighting bug they have been aware of for months, still not ironed out. Lots of other little bugs. Still usable, but the feel is that there is not much support/development for the app at the moment
Just in my case, simply modify
<key>SupportsInsertionOfCitations</key>
<array>
<string>com.literatureandlatte.scrivener</string>
<string>com.literatureandlatte.scrivener2</string>to
<key>SupportsInsertionOfCitations</key>
<array>
<string>com.literatureandlatte.scrivener3</string>
<string>com.literatureandlatte.scrivener2</string>instead of adding a new line for scrivener3 works perfectly, without freezing Papers3.app or making it unable to restart.
Hope that helps 
Additional info:
I use Papers3.app version 3.4.10.
NiwTR
Great that works for you. I cannot confirm this works in 3.4.12 on High Sierra however.
I can change the code, save the file and work with Papers, but upon restart it will tell me the software is damaged.
I will not rent my software. This is the way of madness, there is no incentive for the developer to build and maintain the product when the rent passively arrives at their door every month.
I have deleted Papers and on the hunt for a new citation tool.