On Sat, 18 Jul 2009 14:14:44 -0700 (PDT), Kyle
wrote:

So my question: any ideas on how to give a solid mounting surface to
this one end of the towel rack that's got bad drywall? Some trick to
insert a piece of 1x3 or such (for screwing the rack's bracket into)
inside the drywall without creating too large a hole to cover?

Remove the rack, patch/paint the damage and then use two towel "rings"
mounted at the studs?