I do the paper towels over everything for the first 5-7 days, yes, with pellets underneath to keep things as dry as possible and keep the poop from gluing the paper towel to the bottom of the box.So you put paper towels over the pellets? for the first week or two?
I keep their initial space, that first brooder, limited in size, i.e. like a medium Uhaul box (for up to 6) for those first days. Then they feel like they've REALLY got it made when they move to the bigger box!!
After the move to the bigger area, I just use the paper towels under where they sleep to keep cleaning nice and easy, and to keep an eye on the poop - probably for 2-3 weeks - and then just pine pellets after that.
Elevating the water container after that first week becomes important because they'll start kicking stuff around. Whether it's a scrap of 2x4 (no pressure treated wood in the brooder!) or something else- helps keep the water cleaner.