Sorry for the delayed response, KC. For some reason, the Internet ate the email that should have notified me about the post.
Nationwide, many newspapers do less than 1% of total subscriptions via PDFs, while a few have been able to do as high as 5%. At least some of the subscriptions are given to employees or provided at deep discounts to current print subscribers.
The best way to know if they are successful is to track the coverage in the industry press or at the various conferences. I have not read anything to indicate that papers are excited about the results.
To do it well, they need not only the help of outside vendors but also a large amount of promotion. I have not read anything to indicate that papers are excited about the results.
The vendors have a high fixed cost to get started. I would suggest trying it on your own and see how it goes before considering a vendor.
I wouldn’t suggest using a separate domain name unless absolutely necessary. It’s always a good idea to keep building your current domain in any way you can.