I have some answers for you:
Third-tier newspapers. Neighbourhood and college newspapers tend to be members of "newswires". That membership will grant the publication permission to print stories which are posted on the wire. Whenever a story in your city newspaper is prepended by "REUTERS" or "CANADIAN PRESS" or whatever, is a story from the wire. The Associated Press isn't forming NewsRight to chase community papers, because (at least the legitmate or mainstream papers) are already paying customers, and have been for decades.
Paraphrasing. In both American and Canadian copyright law, facts cannot be copyrighted — only creative works conveying facts (i.e. the writing itself). So paraphrasing a story is "okay" it's considered weaksauce journalism, but not illegal. Keep in mind that proper paraphrasing isn't trivial; it involves telling the story your own way, not just changing a couple of words in the original and passing it off as your own. That's "plagarism" (read: copyright infringement) and definitely illegal.
It's worth remembering that there are cases where permissive licenses are attached to text, either implicitly or explicitly. Companies want newspapers to reprint portions of their press releases (although again, "weaksauce journalism"), and occasionally there's a piece of relevant writing licensed under the Creative Commons (though these tend to be opinion pieces and columnists, not news. It's a bit more common for photos.)
I'm happy to try and answer any more questions. (I was the editor-in-chief of a university newspaper.)