In Soto Zen, dharma-transmission is part of becoming a fully authorised priest called osho (Chinese: heshang; Sanskrit: upadhyaya; i.e. preceptor). Thus it authorises one to be an abbot of a temple (family property). This is of course a result of historical development within Soto Zen as it became an organised church in Japan. I have no objection against that practice at all. What I think is important is to understand transmission not as a "diploma of enlightenment" but as a means to run a church. And that has been the case since the rise of Chan in China since the 11th century. Thus to say that anyone who aspires to be a teacher of Zen must have a paper is not a religious point of view but a bureaucratic one.
Again, that doesn't mean teachers are useless. It's just how we look at people who spread the Dharma. And also it defines our view of Zen. In my opinion Zen is part of Buddhism and has nothing special that could qualify it to be above any other school. It is a form of teaching (actually a large variety of forms) that can be studied and practised just as any other teaching. And some may become great teachers while many others don't regardless of having or not having a transmission from any organisation or lineage.
What the religious meaning of transmission is is the seeing of nature which is identical to the nature of all buddhas. That's how ideally paper transmission is a manifestation of mind-to-mind transmission, i.e. enlightenment. (Here it is also good to note even the meaning of enlightenment is questioned and debated by Zen teachers of the past.) As we can see, however, paper and mind-to-mind is not exactly the same. There are many enlightened people outside the Zen tradition too, so technically they have mind-to-mind transmission. And there are many non-enlightened people within Zen who have paper.
"To know by thinking falls into the secondary. To know without thinking falls into the tertiary."(Yangshan Huiji, X1405p58b18-19; tr. JC Cleary: A Tune Beyond the Clouds, p 43)"While teachers of the middle way, mind only, transcendent wisdom, mantra, and other schools may have their own assertions, the fulfillment of those intentions is the same. There is not a single thing that is not contained within mind."(Gampopa to Düsum Khyenpa, in "The First Karmapa", KTD Pub, p 254)Mahayana LinksThe European Buddhist Blog