When it comes to a seal, you need to be making cartridges that when rolled around the dowel, just fit inside the barrel. Some folks then dip them in beeswax, or a mixture of beeswax and olive oil blended as a lube. I never had a problem that needed the added wax or grease.
Tow or paper will smolder. If you have a serious threat of fire you could dip your tow in a solution of borax and water and let it dry.
When using a 20 gauge I did an experiment. I took a short piece of 5/8" copper pipe, about 2" long. Then I took 100% wool yarn, and carded it back into fuzz. That was stuffed tight inside the pipe, and I stuck it in the oven for about 30 seconds while I was baking something else. (I figured it had to be a bit warm or the lube would cool too fast and not pour to the bottom of the pipe) Then I removed it and put the pipe with the yarn upright on a foil covered dish, and poured in some melted beeswax and olive oil lube. When it cooled I popped the grease impregnated wool out of the pipe and cut it into four 1/2" "wads". I was trying to make DIY wads instead of having to wait for mail-order cork or felt or leather ones to arrive. Seemed to shoot in an acceptable manner.
LD