Jeanne,
I think what some of us above were trying to say is that it is possible for you to print on to a digital transfer paper using dtg printer and dtg inks, but the overall process of doing this is going to be more time consuming, cost more to produce (i.e. ink, paper, labor, additional equipment potentially,...) and will create a lower quality product in the end. The key to understanding all of this is the digital transfer papers come with a polymer that is covering the entire sheet. This polymer is used to "glue" or adhere the ink to the top of the garment. This polymer also acts as an inkjet receptive coating (IRC) that allows waterbased inks to be printed on it without bleeding. With dtg inks, you don't need this polymer layer. When you try to press the digital transfer to your garment, all of the polymer on the digital transfer paper will carry over on to the shirt. This polymer can leave an additional hand (i.e. feel) and potentially discolor the color of the garment. To get around these less desirable effects of digital transfer papers, you can trim / remove the extra part of the paper where you did not print on so that no extra polymer goes down. The trimming part can be done by hand (time consuming) or using an optical registration cutter (less time, but requires an additional piece of equipment). For detailed designs, you will spend additional pulling out the polymer inside the letters / numbers or center of designs - this is called weeding. The same exact effect can be done with inks that are significantly less than the cost of dtg inks on printers that can be purchased between $60.00 to $500.00 (more expensive printers can be used as well, but not required).
As mentioned above, there are two types of digital transfer papers - light garment (transparent polymer) and dark garment (opaque backing). The polymer on the light garment will melt into the shirt and comes out fairly clear - but still noticeable on colored garments. This allows you to print the graphic in mirror image and apply the digital transfer paper face down (which makes the design right side up when you peel the paper from the garment). For dark transfer paper, the paper has an opaque backing to it to block out the colors of the garment (which is what the white underbase layer does for dtg printing). Thus you print the design on a dark transfer paper face-up and then peel the opaque backing from the paper carrier. You place the opaque backing that has a polymer on the back side face-up on the shirt, cover it with a silicone sheet (to protect the design) and close the press.
In regards to the companies that print designs for you like Ace Transfers, they are using a special type of plastisol screen print ink. They have to go through the process of creating the screens for the different colors in the design and then they print this special ink (which is different than your dtg ink) on to a release paper (different than a digital transfer paper) and semi-cure the print. This process is called plastisol transfers and is done for a lot of event on-site productions (fairs, bike rallys, tournaments,...). The release paper used for plastisol transfers does not have an IRC coating on it. So you are not able to use the same paper for plastisol transfers on your dtg printer.
In summary, yes you can print on digital transfer papers with a dtg printer using dtg inks. Is this the business decision? Probably not, but we don't know all the factors associated with your business and whether the final output is something that your customers will be happy with to make the purchase (and hopefully many more in the future). Hope this clarifies things.
Mark