Hi Jared,
Lee Reich (who has quibbles with
permaculture but is generally sympathetic) says he composts all his natural fiber clothing. He does a hot
compost (which seems to be far more efficient than mine) and says they break down in a few months. As far as residues, if you've washed the fabric several times as part of its lifecycle, there shouldn't be anything leachable left IMO.
I'm using old cotton and silk fabrics as a
cardboard replacement in kill mulch, but just started so have no results yet.
The wool sounds like it
should be a great resource. Hmm. I know that Paris market gardeners made mats to protect their plants during cold weather. Perhaps you could sew up essentially thin
mattress covers for that purpose (and/or as a temporary movable kill mulch) if you're doing serious season extension? Then the loose wool wouldn't get caught in tools. Or you could felt it into mats for the same idea...