Between 5-14 level most Humanoid mobs drop Linen. The peak range is 10-14 where one can expect to kill 1-3 mobs for each linen.
If level is not an issue: the highest[[1]] drop rate (60%+) appears to be from the denizens of Pyrewood Village, which are only hostile to Horde during the day, though the hostile-to-all worgen they transform into at night appear to have the next highest drop rate. But due to the time-of-day restriction and the inconvenience of the location for Alliance, the most efficient farming locations for Alliance appear to be the trolls either in Gol'Bolar Quarry in Dun Morogh, or Stonesplinter Valley in southern Loch Modan.
Lvl. 7-9: The tower to the southwest of Brill in Tirisfal Glades has fast-respawning "scarlets" with high drop rates; it's particularly convenient because it's between Brill and the Undercity.
Lvl. 15-17: North of The Crossroads in the Barrens, Venture Co. employees at the Sludge Fen will freqently drop 2-3 cloths, have abundant numbers, and very fast respawns.