Bathrooms at my work have paper towels on hands-free electric dispensers (which I believe are D-battery-operated, so how's that for environmentally friendly?). Sure, it would be better to use a non-disposable wiping solution, but the same could be said about the bathroom.
So if one is going to insist on using non-disposable towels on the bike, they should also have their own non-disposable towels to use instead of paper towels in the bathroom as well.
But given a situation where paper towels are what is provided in the bathroom for public use, isn't it better to get two uses out of the towel before disposing than just one?