Copy or symlink papermario-hot-reload.js to C:\Program Files (x86)\Project64 2.3\Scripts\papermario-hot-reload.js.
Make sure Project64 is using the interpreter core (Options - Advanced - Always use interpreter core).
Make sure a hot-reload server (such as Mamar) is running.
Go to Debugger - Scripts... and double-click on papermario-hot-reload.js.