I do not quite understand why these "blue books" were feared by anyone? I took exams in school/university and sure, sometimes we were nervous and ill-prepared but I do not think anyone feared paper. "Worst nightmare" seems rather hyperbolic.
That said, the essay format was much worse than any multiple choice standardized test.
I am one of those people with deeply held opinions on what makes good stationery, this has never prevented me from writing on bad stationery.