QUOTE (melech @ Feb 20 2008, 09:48 AM)

Kabbalistically, the tefillah shel yad is supposed to be covered, as opposed to the tefillah shel rosh. The paper cover ensures the bayit is covered even if you don't pull your sleeve down over the tefillah shel yad (think [certain demographic] men who wear their jackets like a cape, for example). Now the problem is that your tefillin must be fully exposed when saying the berachah, so that puts you between a rock and a hard place - in theory, you technically really need to take that cover off when saying the berachah. So one way of getting around the problem is to cover it, but leave a hole. That way we're not too inconvenienced and we have plausible deniability: We can pretend the cover is a cover, but we can also pretend it's not a cover. See how nicely "halachic" observance works?
AFAIK, the shel Rosh is supposed to be covered, kaballistically. The BY argues.
As for the rest of your info, I'd like to know where you got it from, because it doesn't make much sense to me and sounds like agenda-pushing.
QUOTE (Tova @ Feb 20 2008, 09:49 AM)

I understand that it's to protect the tefillin shel yad from being damaged, as a nick or marring of the corners could cause it to be passul.
[I've heard that the "little tefillin cover" sometimes falls off easily.]
I think the only way to really invalidate tefillin for reason of not being ravua is if you hit it with a sledgehammer.