Wool Cloth Farming Location in Hillsbrad (Classic - WoTLK)
A good place for Wool Cloth in Hillsbrad is from the Worgens which surround the Ruins of Southshore. There are quite a few different upsides to farming Wool Cloth here. One of them is that there is a super abundance of mobs around. If you're in your 20s and you ran out of mobs in this area I'd be shocked.
Another plus is that the worgen are fighting friendly mobs (as long as you're Horde they will be at least). This means that you can not only start attacking them when they're at half health and still get loot but they will barely be doing any damage to you throughout the fight. Also you'll have assistance of friendly NPCs in killing them.
If that wasn't enough good information about this location then there is more. There is a flightpath literally right next to the location so you won't have to travel very far to get here. So, if you're unable to spam run instances for Wool Cloth and you want to farm it from non elite mobs on your own, this is the spot that gets my vote if you're a Horde player.
Items of Interest:
Linen Cloth
Wool Cloth
Silk Cloth
Low Level Greens
Low Level Herbs (If you have herbalism)
Low Level Ore (If you have mining)