can we replaced it with the normal plastic insulated wire?
Not a good idea. The cloth insulation nomex or kevlar and is for heat resistance. Without that you are likely to melt the wires at the point where they go into the appliance.
NO!!! It is for high heatJust get a new toaster
Only old appliances did this, and they probably had a lot of a now banned substance, asbestos, in them to handle the heat.
i don't think it would be cloth, that would catch fire
