A manual entry interactive paper and electronic document handling and process system uses a pen-like instrument (PI) with a writing point for making written entries upon a physical document and sensing the three-dimensional forces exerted on the writing tip as well as the motion associated with the act of writing. The PI is also equipped with a CCD array for reading pre-printed bar codes used for identifying document pages and other application defined areas on the page, as well as for providing optical character recognition data. A communication link between the PI and an associated base unit transfers the transducer data from the PI. The base unit includes a programmable processor, a display, and a communication link receiver. The processor includes programs for written character and word recognition, memory for storage of an electronic version of the physical document and any hand-written additions to the document. The display unit displays the corresponding electronic version of the physical document on a CRT or LCD as a means of feedback to the user and for use by authorized electronic agents.