HAHAHA. Over the years I have found many rags in engines, water pumps, oil pans, trans, diffs, door panels, in dashes, et al but that's the first I've seen on a camshaft. Probably not intentional. While you have the valve cover off, I'd make sure the drain passages are free of rag bits. Also, dropping the pan & checking the oil pump pick up (and maybe the oil pump, timing chain, IP drive, etc) is a good idea. Unless it caused oil starvation, your engine should be OK.