It would be fine for crafted items, though.
For example, we have those kinds of spears: wooden (fire-hardened), stone, copper, knife.
For monsters, having templates like young, monstrous etc. would add some flavor to the game.
Due to lack of recipes, wool is pretty useless as a material. Allowing it to substitute cotton would actually allow making it useful.
Even if it was as simple as just generating a duplicate entry with cotton replaced by wool and tiny adjustments to warmth.
The items in the game are only as representative of real world as their uses are. If an item is made useless by game mechanics (but useful IRL), it won't be representative until it becomes useful. In this case, wool is useless because of limited recipes and mild winters.