Your understanding is incorrect. The liner goes on the inner rod, and the decorative curtain goes on the outer rod. Towels need air circulation to dry, and they won't get that by hanging on top of the wet curtain.

And you should be fine with a curved rod.

I would go with the single curved rod. I have double hooks on mine that the inter and outer curtain can be hung on one hook. They have little ball barings on the part that hangs on the rod. Easy open and close.

I got a Bed Bath and Beyondshower curtain with an attached liner (it attaches about 1/4 of the way down) -- it's great.

You'll be fine with a curved rod. I have a curved single rod in a similar tight setup next to the toilet (however, mine is not a tension rod). I usually leave the shower curtain pushed open to the right (non-toilet) side when not in use to make the bathroom appear larger. I tried several different shower hook options. These were the winner by far (especially for ease of taking curtain on/off which was important in my case because I have an extra tall shower curtain I have to get on a step stool or small step ladder to reach the top of): https://www.amazon.com/gp/product/B017DM37Z2/

Thanks all!

Emily R - do you find the curtain slides easily without having true hooks?

Yep, it slides fine. :)

(^This is Emily R — app is not letting me sign in.) Another bonus: no rusty hooks.

How did it work out for your bathroom? We have a similar bathroom with the toilet close to the tub.