ohhhhh.
John, when we were looking at your "PLAN", I forgot to tell you that one of the classiest hotels in SF (yes, they do have some classy stuff in SF) uses fluffy, thick, white wash cloths for hand towels. They have lovely baskets full of them on the counter near each sink and a large, floor standing wicker basket to put the used cloths in.
I figured that they used the wash cloths because people were less apt to steal them and they are a little cheaper than hand towels. Also, the cloths didn't have to have the hotel logo on them (made it lots cheaper).