There must be some other issue in that scene.
Internal resolution isn't problem, I am rendering 7680px in Internal res=2, so 15k px width, and even the gigantic scene with forests, disps etc. (Kogan house), took only 20GB.
Subdivide your towel mesh, and then limit your max. disp subdiv to some low number (8?) and see if it doesn't give you indentical result.
What is the total ram usage with and without disp ?
Also, internal res doesn't affect overall quality, noise or 'artifacts'. It just downsamples internally after tone-mapping so you have cleaner edges around highlights. Nothing more, nothing less.