You’re just gently plopping with the towel, not like scraping off product. If anything, the product gets more squished into the hair. Don’t overthink it.
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Yes, some gets absorbed into the towel when you do that, but if it styles so much better, your question doesn't really make sense. If all I need is, say 2/3 the product I'm using while raking and scrunching, but can't distribute evenly and work with the smaller amount, I'm still better off using what works for the wet styling then absorbing some, along with a bunch of the water, off my hair with the cloth. Win-win.
Now - having said all that - I don't always do the very wet styling. Sometimes I do blot the hair first then damp style it. Especially if I'm not washing it. And very often I do curl cream and leave in into very wet hair by raking & combing, for definition, then blot and scrunch pretty aggressively to take out water, then distribute gel gently throughout the hair, carefully, then a gentle scrunch and glaze the outer layer with gel.
Basically, if it works better I don't think it's a waste of product. You rinse shampoo off and right down the drain to get it to work right, so if you get better results styling with very wet hair and too much gel then squeezing some out, it's a use not a waste. Just do whatever works best.