I've never heard of it being used for that -- which doesn't mean it hasn't been done.

How large (esp diameter) are the holes?  How much bulk would you need to use, a cubic cm or so?  The main problem that I am visualizing is the paper fiber "clumping factor".  Even when you break down the paper source into fibers, the stuff still wants to clump together, even when it's quite liquid.

The only way I can think of doing it might be to make or acquire a lump of dry papier mache -- really dry.  Then file or sand it down into a spoonful of dust.  Carefully gather up the dust and mix it with some quality wood glue in a tiny container, not too liquid, maybe clay-like or just a bit softer. 

Depending on the diameter of the holes, you might be able to roll the pulp/glue mix into a 'snake' to get it into the hole, then tamp it in, packing the mix with some kind of tool, like a metal rod that is just slightly narrower than the hole.

As you're tamping it in, wipe off any liquid glue that squeezes out of the hole.  As you get to the last bit, pack it in, but try to leave some sticking out in sort of a lump.  Let it dry really well, then sand the lump down so it's flush with the surrounding surface.  Make sure it's really dry before you finish it.  And remember that PM tends to shrink as it dries, so the less moisture you can use, the better.

This is the only way I can think to do it.  Maybe someone else will come up with another idea.

Sue

You got GIANT woodworms??  If the holes are less than one half inch diameter, it really isn't worth thinking of papier mâché.  There are good proprietary fillers on the market in a variety of colours.  I have used paper pulp to caulk between floor boards and larger areas of furniture.  If it is made properly, it can actually be quite hard to sand.

I see no reason why a papier mache and glue mixture wouldn't work (paper is wood after all), but a sawdust and/or wood shavings and glue blend would probably look better and be more malleable/smooth.  I've used some of that store-bought stuff (can't remember the brand name) for filling in holes in the past too, and I'd bet that's more-or-less what it is, sawdust and glue.