To use guest towels or not to use them depends on your own family's bathroom traditions. In many families, nice towels were just for 'show'. They were a way to create or complete the color scheme of the bathroom. Often, they took up valuable real estate and sent guests guessing. Is this for me? Is this for show? There's always toilet paper. But those little wet bits and pieces are so annoying and picking them off your hands is time consuming.
Using 'show' towels, depending how close you were to the resident interior designer aka the woman of the house could earn you a scolding or calling out. "Who used my towel? It was for show." Should they have used your towel? No one wins when a guest uses a personal towel to wipe their hands. The host gets to do more laundry (their towels are larger than guest towels) and guests get who knows what.
"I didn't want to use your nice towel, so I used the one hanging on the wider rack." A well meaning guest said recently. That towel, apparently not as nice ended up in the hamper and was replaced by a fresh one. Meanwhile the guest towel was still fresh. The intention was thoughtful and kind but guest towels are called that for good reason. In trying to do the right thing, they have done the wrong thing.
Yvette takes her towels out of the bathroom when she entertains and places towels on the racks and a tray of paper napkins near the sink.
I take my chances. I leave my towels in the bathroom, cover one with a sheer guest towel hoping that someone will get the hint, 'Use this, not MY terrycloth towel underneath.' I then place a couple on the sink.
Our mother has come up with a solution that we strongly don't recommend. She has three guest towels. Pinned to one of them is a little note, 'Please use paper guest towels.' While we share many genes with her, the show towel one skipped us. We prefer thank you notes.