There's no way it would work at bedtime - a baby who's not tired won't go to sleep full stop. We have no problems usually at bed time - Alex settles after bottle and bath all by himself, but if he gets over stimulated during his bedtime routine he could push and push all night.
I found when they're overtired, even when they go to sleep with crying because they're so exhausted, they'll wake up again pretty quickly - even a slight twitch will wake them - and you're back to square one. The five minute sleep they've had seems to give them enough energy to keep going for another hour.
I did the towel thing regularly with Daniel (either that or a drive to Birmingham and back at 2am which isn't safe) because he was in nursery and they couldn't get him to have a daytime nap. Callum slept when and where he felt like it so we never did it with him. We did it a couple of times with Charlotte, and so far we've done it once with Alex - he was still at it at 1am, wouldn't take a bottle, within 5 minutes of holding him, he was zonked out, and after another ten minutes of cuddling he went down in his carry cot until his normal feed time.
Alex now sleeps with his eyes open during the day so he can wake up if he's missing anything - looks very odd and we crapped ourselves the first time he did it - but it seems to stop him getting over tired.
Every baby is different - some will never get over tired, others will do it every day. Some will happily watch the world go by all day long, others will want to be responsible for making the world go by, most will be in between. I wasn't suggesting that every parent should do it at every bedtime, I explained (pretty badly!!) what we do *as a last resort* when baby is *way overtired*
The towel / sheet / muslin or whatever you use doesn't work by making it dark - it works by making their world smaller and they feel more secure. Daniel objected if I was under the towel with him - he needed to withdraw completely, Alex calmed down better when my head was next to his under the tea towel - if I need to do it again with him, I'll use something bigger. I've seen toddlers hide inside mummy's coat when they're overwhelmed, people hide under covers / behind cushions when they're scared - the rest of the world is still there, but it doesn't need to be worried about
my little girl is a nightmare when bed time arrives, if shes not ready then shes not ready, i either sing to her or get her back up, 10 more minutes of playing usually does the trick. i would never ever force her down to sleep!!! that gets you no where apart from getting stressed yourself and your baby senses your emotions so if your stressed your baby will be. also a nice lavender bath does the trick, there are loads of other options than force. 
