Yes. If he is pooping normally with round normal sized poos, eating and acting like usual, it means there is no blockage and that the guts are eliminating the towels. So, it should be fine 
Rabbits tend to eat the weirdest things and it's generally eliminated without any trouble if the rabbit is young and in good health. Mine have eaten about everything from wall paper to zippers (one of my previous rabbits LOVED those and killed several coats and shoes), electrical cords, books, linen... Weirdly enough, they've had slow guts due to their moulting but never from eating something they shouldn't have ^^'.
Rabbits tend to eat the weirdest things and it's generally eliminated without any trouble if the rabbit is young and in good health. Mine have eaten about everything from wall paper to zippers (one of my previous rabbits LOVED those and killed several coats and shoes), electrical cords, books, linen... Weirdly enough, they've had slow guts due to their moulting but never from eating something they shouldn't have ^^'.
