If the picture can be scraped off, then yes, you should have it tested for lead in paint. It's probably cotton flannel, and If you are just going to use it for wipes and the like, it's not really clothing, so I think you are okay not having it not tested for 1610.
There is no exemption for upcycled, used, recycled or whatever. Some of the older stuff might not meet current standards or practices. If fact, many of the old toys, cribs and other baby items should not be sold, but destroyed.