Does that command only affects the contents of \paragraph{}? I've tested it and it doesn't seem usable, as it outputs text in bold and the counter, in the very least, needs a lot of work.
What I was looking for was something which might turn this content:
<blockquote>
\chapter{Foo}
Lorem ipsum dolor sit amet, consectetuer adipiscing elit.
Etiam eget ligula eu lectus lobortis condimentum. Aliquam nonummy auctor massa.
\section{Foo 2}
Pellentesque habitant morbi tristique senectus et netus et malesuada fames ac turpis egestas. Nulla at risus.
\chapter{Bar}
Quisque purus magna, auctor et, sagittis ac, posuere eu, lectus. Nam mattis, felis ut adipiscing.
</blockquote>
Into something like this:
<blockquote>
1. Foo
§ 1 (1) Lorem ipsum dolor sit amet, consectetuer adipiscing elit.
§ 1 (2) Etiam eget ligula eu lectus lobortis condimentum. Aliquam nonummy auctor massa.
1.1 Foo 2
§ 1.1 (1) Pellentesque habitant morbi tristique senectus et netus et malesuada fames ac turpis egestas. Nulla at risus.
2. Bar
§ 2 (1) Quisque purus magna, auctor et, sagittis ac, posuere eu, lectus. Nam mattis, felis ut adipiscing.
</blockquote>
Preferably, the paragraph counter (the §\d bit) would be placed outside the text body.
Does LaTeX provide any package or hack that pulls this off?