Ok, I'm new to this forum but I'm gonna put my two cents in. The wife and have decided that living frugally is a must but we are finding that there are a few non-negotiable rules that will have to be observed at all times. So far for me, high quality toilet tissue is a must. For her no hanging of her undies outside on the clothesline. As for paper towels, we could and should live with out them because we buy a 6 roll bag once per week. Over $300 per year there!
I COULD live without them. But won't be giving them up entirely in the near future. We use a six pack over the course of about 3 or 4 months. I'm noticing that as my kids get older I use a whole lot less of that type of stuff.
I don't have paper towels in the house and haven't bought them in months.... not to mention, the last time I did buy them, they lasted forever. so, to answer your question, yes, I could live without paper towels.
I use rags for cleaning- especially love old socks (natural scrub mittens.) But for the life of me I can't think about putting some things into the washing machine. Dog deposits of one kind or the other for one. Also I don't like to run fat into the septic system so I use paper towels for draining bacon or such. But for drying hands- I have towels for that.
For someone who spends hours each day de-pooping various animal pens and covers outside, I sure am squeamish about stuff inside. I remember the whine that was forced out of me when the septic tank inspector (yes we have them,) wanted to lift the lid to show me something- I never looked.
I buy the VIVA brand, and they are really thick, like a 'shop towel'. One will do the trick for just about anything you need. I use them for grease catchers, drying, etc. But its just the DH and me, ...well, mostly me, and we use about a roll a month. But I think to some extent we could live without them.