Afternoon all

Welcome to cute embroidery.

I use trace and toile for most things too but not tried it on a towel as I usually use tear away or wash away stabiliser. If you must use the trace and toile it would need to be cut away as Wendy has mentioned.

However, from experience the trace and toile melts with a ordinary hot iron. So you could experiment if you Have an old towel or wash cloth you could practice on. I would test also for you but my new same temp iron allows me to iron chiffon to linen and has no temp dial so it doesn't melt the trace and toile. It may or may not work so please test first as it would be terrible if it ruined the towel or your iron. Make sure to have nonstick paper between your iron and the towel. Let us know what you ended up doing.

I use trace and toile all the time, you would have to cut it away, a bit hard on a towel, when I emb. t.towels, bibs, etc, I put a frame around the design, and either do the design before sliding the towel under the hoop, or as a normal appilque, putting a piece of white fabric under the hoop before final satin st. frame...wendy

Welcome to Cute. Hope you will like it here and stay around.
I have never tried either Trace or Toile as a stabilizer so anything i am saying is just a thought. You want something sturdy enough and I wonder if for instance freezer paper would do the job or card stock. Hopefully others will be more helpful. Lets us know how you solved the problem. BTW do you have any WSS not the plastic kind available to you? That would work