I wouldn't recommend wool washcloths... in addition to what the others have posted, the washcloths would take AGES to dry out, and depending on whether you alternate wash cloths or not, they may never dry out. It could be kinda stinky after awhile...
Felt pads are good, even oven mitts. Wool is a good insulator, so stuff that would protect objects from heat is good. Tea cozies maybe?