Hi Chee,
That is by design, When using Print button it uses the default printer settings and does not use what is saved in the RPT file.
Download my test app from KBA 2163438, app is attached. In SP 14 you can set the Print Button to use the PrintOutputController API which uses the CR Designers Printer Dialog box, only issue is when using the paper tray it does not load it by default. Should be fixed in SP 15 dues out end of this month.
Don