I don't know if this is ok or not but instead of batting I used shredded up smoke wick in the bottom of the smoke unit. My feeling is if it is ok as smoke wick for liquid smoke why not in the postwar smoke unit. I have heard that some people leave out the batting altogether.
The most important part when fixing a burned out smoke element is the new element. I actually prefer the original Lionel elements as to me they look more robust than most current replacement elements. Finding originals is not always easy and I have purchased used ones in the past.
This is just my 2 cents worth.
