Best practice for oily rag safety?
From the Material Safety Data Sheet (MSDS) of Klean-Strip® Boiled Linseed Oil.


  Flammable Properties and Hazard
  
  RISK OF FIRE FROM SPONTANEOUS COMBUSTION EXISTS WITH THIS PRODUCT.
  Oily rags, waste, and other oily materials can cause spontaneous
  combustion fires if not handled properly. Immediately after use, and
  before disposal or storage, you MUST (1) Spread out all oily materials
  outside to dry by flattening them out to their full size in an airy
  spot for 24 hours at temperatures above 40 degrees F, or (2) Wash them
  thoroughly with water and detergent and rinse.  Repeat until you have
  removed all oil from all clothes, tools, rags, paper, clothing, mops,
  and any other materials contacted during use or as a result of an
  accidental spill. Make certain all wash and rinse water is disposed of
  properly.


It also says the Flash Point is 250&deg;F, but has "No data" on the Autoignition Temperature.

The principle at work here is that Linseed Oil cures due to Reduction Oxidation, a chemical reaction which creates heat (Exothermic Reaction). If the heat cannot dissipate quickly enough (insulated by a pile of rags, for example), the process can accelerate creating more heat and eventually resulting in combustion. 

It's always a good idea to check the MSDS for any chemicals you use.