It is mostly gravel with some areas of hard packed dirt. It is only paved for a small bit in Bellingham. Closer to Larrabee it it a little more trail like.
I don't think it is any more scenic than Chuckanut. In fact, I would say far less. In my mind the only purpose of the Interurban is to give families a way to bike to Larrabee on their mountain bikes or hybrids without having to be on the road.