From what I've read, the bonus cloth only shows up to tailors. Others can loot the mob like normal, but if there is bonus cloth then tailors will still see it glowing. However, it's first come first served for that bonus cloth.

I'm just curious if I make all 5 of my toons tailors, and level them up enough so that they get the extra cloth drop, if the benefit will stack.

The other confusing part I've read is that it only works if a mob can be "assigned" to a player. So, using a free for all loot system won't yield any extra cloth because no mob's loot table was ever assigned to a player (not a reputable source or anything, just random discussion boards on the web)