Top wainscot with a peg rail, rather than a wood cap, for a charming way to hang towels. Paint the rail the same color as the paneling below it, as shown here, or match it to the walls. 3½-inch-tall Plain Shaker peg rail in lengths of 12 to 90 inches, 99 cents per inch in unfinished poplar; nhwoodworking.com
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