First - WoW Exploit Community 2012 recommendations!
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When it comes down to farming runecloth, whether it be for rep or just for gold, there are many debatable farming spots. In my opinion, they are all the same, all of the mobs have the same percent chance to drop cloth, its just a matter of how many mobs there are and how long you are willing to farm. My personal favorite spots are all in Eastern Plaguelands. These locations are Browman Mill, Zul’ Mashar, and Tyr’s Hand (though farming those mobs can be a bit of a hassle when it comes to speed).
Browman Mill has a small amount of mobs but a very fast respawn time. Some of the mobs have as little as 3k health which is like 2 frostbolts for me, so that takes a load off the farming time. You can start at Light Hope Chapel and work your way to the entrance of the spawning glen (or whatever its called). Zul’ Mashar has many mobs, but the real plus is the middle area with all of the piles of dirt. These pop zombies with little health. As a mage I can aoe the crap out of these guys along with the pack of skeletal engineers just down the road from the entrance to Ghostlands.
Between these three spots, I can easily farm about 10 stacks of runecloth an hour, but to be perfectly honest, its incredibly dull . But for future reference check out these spots if your in the need for some cloth. Oh and BTW, if your planning on exclusively farming runecloth for rep gain, rather than purchasing most off the AH, it takes exactly 520 stacks to go from 0 Friendly with a faction all the way to Exalted. So you better start farming