Cutting them up into small squares is a waste of time - the stuff is so brittle you can easily pull it apart afterward. Just make sure it's pure cotton; if there's any synthetic material in them it won't be nearly as effective, if it works at all.

I could be wrong, but I believe you can actually set fire to the smoke as it comes out the hole; when there isn't enough smoke left to burn, the char cloth is done. (I could be wrong; I remember making charcoal and coke this way as a science experiment when I was a kid, using one of those old Tate & Lyle syrup tins. Probably can't get them anymore but they were perfect - had a large round lid in the middle that you pried off with a knife, similar to opening a can of paint.) I used an electric stove in the kitchen, btw. Just put the burner on low heat. I suppose you might be able to get away with a Mason jar, even, but I would definitely do that out of doors in case the glass cracked and the contents caught fire. (Now THAT would be fun trying to explain to the insurance company <img src="/images/graemlins/blush.gif" alt="" /> )

I have an old pair of blue jeans that the crotch is ripped out of; I think I will turn the pant legs into some sort of carry sacks or padding for something and turn the rest of the pants into char cloth.