can you travel by plane to another province using the YELLOW PAPER, while your passport is submitted for residence permit. have anybody tried it?

Yeah I've done it (both plane and bus) and it's definitely doable! Just get back to Kunming before your yellow paper expires.

Yes you can.

when does the yellow paper expires? if it is the collection date then its already over. and the people at the office needs more time to finish it seems. will it be a problem??

I would think that it would be a problem if it has expired. I would go back to the PSB and ask for a new one, explaining that you need it to travel with.

For the record I recently took a plane from Shangri-La to Kunming using my (already somewhat battered) yellow slip that had "expired" three days earlier and nobody bat an eyelid or asked for a copy/scan of my passport. At security they looked at the dates for a bit but I suppose because I was heading back to Kunming they didn't question it.

When I tried to check into a hotel in Guangzhou using the same slip (my Kunming stopover was out of PSB office hours) they first didn't know what it was, then pointed out that the "collection date" had already passed, but when I told them that my passport hadn't been ready on the date they just let me stay very quickly. (I don't know if it would in fact have been ready, but the first time I got a residence permit my passport wasn't ready until almost 4 weeks after the original "collection date" for no apparent reason, so it's definitely not a hard and fast "expiration date" but just an earliest collection date.)

I thought this was about using yellow fly paper.

Jokes not allowed I see.