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We present a new framework for data hiding in images printed with clustered dot halftones. Our application scenario, like other hardcopy embedding methods, encounters fundamental challenges due to extreme bilevel quantization inherent in halftoning, the stringent requirements of image fidelity, and other unavoidable printing and scanning distortions. To overcome these challenges, while still allowing for automated extraction of the embedded data and a high embedding capacity, we propose a number of innovations. First, we perform the embedding jointly with the halftoning by employing an analytical halftone threshold function that allows steering of the halftone spot orientation within each halftone cell based upon embedded data. In this process, image fidelity is emphasized and, if necessary, the capability to recover individual data values is sacrificed resulting in unavoidable erasures and errors. To overcome these and other sources of errors, we propose a suitable data detection and error control methodology based upon a statistical representation for the print-scan channel that effectively models the channel dependence upon the cover image gray-level. To combat the geometric distortion inherent in the print-scan process, we exploit the periodic halftone structure to recover from global scaling and rotation and propose a novel decision directed synchronization technique that counters locally varying printing distortion. Experimental results demonstrate the power of the proposed framework: we achieve high operational rates while preserving halftone image quality.