New Orleans (21-18), which began the season 3-8, has won eight of 10 to move within five games of Southwest Division leader Dallas.
"We consider ourselves a work in progress," West said. "I don't think we can say we're at a certain point yet. We just have to continue to play hard and get better because we dug ourselves a hole early."
Paul finished with 22 points, 11 assists and eight rebounds, and Emeka Okafor had 14 points and 12 rebounds for the Hornets, who won their fourth straight over Indiana.
"We wanted to come in really aggressive, not allow them to get going early at home," West said. "That was our strategy and we were able to stick to it."
Roy Hibbert scored a career-high 27 points and grabbed 10 rebounds, and Dahntay Jones added 16 points for the Pacers (14-26), who had their three-game winning streak snapped. Danny Granger, Indiana's leading scorer, was held to 12 points on 4-of-13 shooting.
"We let them off the hook too much," said Pacers guard A.J. Price, who added 12 points. "We've got to be aggressive and get good looks and knock them down."
Indiana trailed by seven entering the fourth quarter, but Granger's five straight points cut the deficit to 97-93 with 3 minutes left. The Pacers had a chance to get within one or two, but New Orleans forced a turnover and Paul converted a running layup to push the lead back to six.
Granger missed a 3-pointer on the Pacers' ensuing possession, and following a Hornets miss with 30 seconds left, Price was short on a 3. Paul's two free throws helped seal the victory.
"Right now we need to keep our head above water to stay in the chase for the playoffs," Paul said. "At times this year we've seemed to struggle."
Neither team led by more than five points in the first half and there were 11 ties and 10 lead changes. The Hornets went ahead 52-48 on Okafor's layup before halftime.
Paul had 10 points in the third quarter as New Orleans built a 65-53 lead midway through the period. The Pacers got within three before falling behind 75-68 entering the fourth.
"A tough shooting night," Indiana coach Jim O'Brien said. "We stayed in it and gave ourselves a chance to win."
Pacers G Luther Head (sprained left ankle) and C Jeff Foster (sore lower back) did not play. ... New Orleans F Ike Diogu, a former Pacer, missed the game with a strained left knee. The Hornets also played without F/C Sean Marks (strained plantaris muscle, lower left leg) and G Morris Peterson (back spasms). ... Many of the fans at half-empty Conseco Fieldhouse wore Indianapolis Colts jerseys and shirts to support the Colts, who were playing the Baltimore Ravens in an AFC playoff game at nearby Lucas Oil Stadium. One fan, who wore a Colts jersey with the name "Pacer guy" on the back, displayed a sign that read: "Tailgate at Pacers game. This is the place to be."