I can verify that paper towels will not combust after multiple minutes in the microwave. I usually dampen a (clean) hand towel to wrap/steam tortillas (under 40 seconds) and have never had an issue with that either.

I'm not sure that a dry cloth has enough microwave cross section (for lack of the proper term) to heat significantly, and a damp cloth therefore wouldn't go above boiling point. I'll experiment in my cheap office microwave.