I've done the fabric crayons on pillowcases.. which are probably poly blend (didn't check the label) which turned out fine, and used to use regular crayola crayons to do some pretty leaves on muslin which also worked well.
Questions: Did you leave the iron on the crayon/fabric panels until the heat of the iron bled the crayon mix into the paper towels?
Were the crayons Crayola brand?
Why? Because you need to melt the wax completely to release the color. If the heat didn't put the melt into the paper towels you didn't leave the iron on long enough to set the color. It will definitely smell like burning crayons! In this case that is a good smell, because it means you are melting the wax.
Crayola brand crayons have more dye in the crayon than other brands of crayons, so they tend to "stain/dye" the material better than other cheap brands (which I have tried and did NOT have good success with).
You may want to just use fabric markers at this point if you don't want to try the crayon version again. I've used all three (markers, fabric crayons, and Crayola crayons) at one time or another and had good results.
Good luck!