Hey, I’ve used 100% acrylic yarn for potholders for years.
I switched over to cotton for a better feel.
All my potholders were two layers thick. My worry is that the cotton will get wet and conduct the heat, but I think any fiber can do that.
I know cotton does not burn well by itself, it does smolder but can easily be extinguished by running under water in the sink. Cotton is the fiber used in candle wicks, it wicks the wax to burn but is itself slow to burn.
Cotton, acrylic or blends are easily washed and dried without shrinkage.
I’ve never used wool for pot holders.