This is definitely something that doesn’t bother me while I’m in Korea, but if we were living in Australia in our own place I’d have all the paper in the “right places”. Since my parents usually have Koreans boarding with them my mother has made a rule of no toilet paper in the kitchen. While it’s natural for Koreans to have it with them while cooking, it’s too odd for Australians to be using it as much a multipurpose thing.
We do have kitchen towel in the kitchen at my inlaws house here, but I think I use it more than anyone. I use it when cooking and as a serviette/napkin while everyone else is using the toilet paper. Having meals in Korea is vastly different to what I grew up with as well because the style of eating is so different. I would definitely fold the napkins into nice shapes and place them on the plates for nice dinners or when we had guests in Australia.
What Hugh said about sometimes using newspaper for toilet paper as a child was surprising for me. It is interesting to see how different our childhoods were.