Wool Cloth Farming at Thistlefur Village (Classic - WotLK)
The best place in the game to farm for Wool Cloth outside of instances is at the Thistlefur Furbolgs in Ashenvale. In the far northern part of Ashenvale, just above Astranaar, you will find Thistlefur Village and a large cave at the northern end of it. Inside and outside Thistlefur Village you will find dozens and dozens of furbolgs, each of which are extremely squishy (low HP/Armor) and have a high drop rate on Wool Cloth.
You can technically farm the furbolgs in Ashenvale at any point past level 21 but I would recommend avoiding the cave full of furbolgs until at least 23 or higher. The cave has such a high density of enemies that you're unlikely to get single pulls in there, which is what makes it such a great place to farm Wool Cloth too.
Items of Interest:
Low Level Greens
Low Level Herbs (If you have herbalism)
Low Level Ore (If you have mining)