I'd have a go at hand spinning it. A hand spinner isn't hard to make and it's a good skill to have.
Spun up that would be enough for a garment I'm sure. Definatly a gorgeously warm hat and scarf if not a jumper.
I love alpaca wool. It's a delight to knit with and makes wonderful warm garments.
I'm lucky to have a friend with a herd and buy my wool from her. Expensive but worth it at £10 per 100 grams. And that is cheap!