Runecloth is a staple of any server's economy. Typically, it isn't necessary to grind specifically for runecloth; since so many other mobs drop it, simply as a part of normal adventuring and other grinds you will accumulate quite a lot of it. However, if you are farming specifically for runecloth, some of the best places include within the instances Dire Maul and the beginning of Stratholme and many places in Eastern Plaguelands such as the Noxious Glade, Browman Mill, and Tyr's Hand (although Tyr's Hand consists of level 54-60 elite mobs, so farm at your own risk).