Technically unchecking the setting "Allow recipients to sign on paper" takes away the "Print and Sign" option under Actions that can be taken by the Recipient. However, Recipients are viewing the document in a browser window and could easily choose to Save or Print the document from the browser window. That cannot be stopped.

Have you inquired about why the Recipients have chosen to print and send the document back through email? Perhaps adding a clause in the document suggesting that this is the required to do business with your company but again that seems a bit exclusive but my only thought. But I would try to get the reason behind the method they are using, perhaps they are just misunderstanding the purpose of electronic signature.