The dust appears to be hammer felt, from 50 years of vigorous wear against the strings. The width of some of the hammer grooves suggests the hammer flanges pinning is somewhat loose, adding to the wear. It's possible a previous technician had used a strip of sandpaper to file the felt in situ, without cleaning up after himself. If the damper felt surface had hardened and become noisy, sandpaper might have used as a quick way to reduce tangs and buzzes. Thus, all that fuzzy dust.
Some of those hammers are worn so deep they ought to be replaced, but removing the action, reshaping the hammers to some extent, repinning hammer flanges as necessary, (and thoroughly vacuuming out the piano) may make tuning and playing the instrument more pleasant for a few more years.
------------------------------
Patrick Draine RPT
Billerica MA
(978) 663-9690
------------------------------