As a teacher, I see this primarily as a "harmless" habit. However, if your 5th grader is required to turn in "pristine" papers for grading, that is a different situation. Try not to overreact when your child twists the corners, but do suggest that he use a separate sheet of paper to do this, so “it will be easier for the teacher’s to grade.” This kind of seemingly mindless activity does seem to help some students focus when they are thinking. By encouraging your child to doodle or twist papers, it gives your child a harmless outlet. Since your child is bright, you might encourage him to list his ideas on a separate sheet of paper, so he can explore them more at a later time.
Could you give your child a small, soft ball or toy to squeeze when he reads? If he anchors the pages with one hand, but needs to keep the other hand busy to help him concentrate, then the little "squeegy" ball can occupy his other hand. Likewise, when he's writing, one hand will be busy with handwriting, and the other with the ball. Perhaps even holding a pencil or pen while your child is reading, will discourage paper twisting. Or having a doodle pad handy. Ask your child what would help him the most, because changing one habit for another will require that your child likes doing the new thing. It's important that this new habit be a quiet one, for your child's concentration and for those students around him. Adults devise all sorts of constructive habits to help them concentrate when they're reading and listening, as we can see when we go to a library or listen to a public speaker!!!