I am not exactly sure if ther resin melts the cloth, but I do know that it works the same way as the glue I just mentioned.
Nah, there's no melting going on. Since fiberglass is essentially just super thin strands of regular glass, I'm pretty sure it would take pretty high temps to melt it. All composites are comprised of at least 2 constituent materials. In our case, we have the reinforcement material (the fiberglass cloth) and the matrix (the resin, or in this particular case, wood glue). The matrix serves to bind the fibers together and transfer any loads to them. So as long as the matrix binds and hardens the fibers, like the wood glue seems to do well enough here, then there's no reason for it not to work.