Your rabbit is turning to ingesting cardboard to try and get the fiber he needs for good gut motility, which he should get from hay. The problem with a rabbit eating too much cardboard and paper, is that it can form a gooey mass in a rabbits digestive system, that has the potential of forming a GI blockage.
Those pellets aren't actually a plain hay pellet. They are a normal food pellet with the added vitamins. Plain hay pellets only have hay in them. Like this.
http://standleeforage.com/product/timothy-grass/timothy-grass-pellets And these are usually found in large feed bags at livestock feed stores. They do fine as a temporary measure or if there is just no other way to get a rabbit eating hay, but loose long stem hay is really the best thing for your bun to be eating, if you can get him eating it. But until you can get him eating hay, you still need to make sure he is getting enough food as you don't want his digestion slowing down too much, or risk him losing too much weight. If he is used to eating normal food pellets, then continue feeding him as you normally do until you can find a hay he is interested in. Then you can gradually start to reduce the amount of pellets he is used to as he starts eating hay.
If you haven't tried a different variety of grass hay, that would be a good next step. Timothy is just one type of grass hay. Basically any grass hay will do. Some other types are orchard, oat, bermuda, coastal, meadow, etc. The one you don't want is alfalfa, as that is a high protein legume hay, and not really good to be feeding most adult rabbits. Some rabbits can just be quite picky about their hay. And even with a particular variety like timothy, it can vary quite a bit with each crop. I have several different bales of timothy from different crops, and I can tell that my rabbits do prefer one over the other, even though all of it is the same grass, timothy. You could start with orchard or oat, they seem to be fairly well liked by many rabbits. Just the one caution with oat hay is if it has a lot of mature seed heads in it. This can sometimes put too much carbs in a rabbits diet leading to mushy poop and/or weight gain, so if this is the case, you may need to pick out some of the seed heads.
http://www.therabbithouse.com/diet/grass-hay.asp
If you try a couple different hays and he still isn't interested, then the next step I would take is having his teeth checked. With dental problems, rabbits can start to selectively feed. Meaning they will only eat certain foods and tend to avoid eating the ones that cause them the most pain to chew. So yes, dental problems are also a possibility and can really occur quite rapidly, in a matter of weeks, due to the rapid rate that rabbits teeth grow.
http://www.bio.miami.edu/hare/dental.html
