It would help with blood circulation I guess (I've noticed the weaner gets pinkish after the hot towel treatment). But as far as heat causing a shift in the elastic modulus of hte dick or the yield point, I doubt if it would be sufficient. I'm thinking in terms of regular materials. Heating is known to shift the yield point of materials (the point after which deformation is plastic. Till the yield point, deformation to applied stress is elastic). So theoretically, heat is supposed to lower the yield point, and plastic deformation => Penis Enlargement gains.
But I doubt if heat pad/warm towels can heat the inner tunica to fairly high temperatures to shift the yield point. Think about how high you need to heat a plastic to achieve plastic deformation when you stretch! Also the thermal condutivity of human tissue being poor, the temperature gradient between the tunica and the outer dick skin will be large, ie, there is not enough heat crossing over to the tunica owing to the poor thermal conductivity of penis tissue. However this is just my view, not enough proof to stand by it!
Infact that was one of the main reasons I looked into infrared for heating the inner dick. The NASA research was an added bonus I stumbled upon!