You could make a bushshirt or cloak/birrus with it ?
It sounds a bit like coatmaking cloth. Thinner than a blanket but soft/fluffed ? If it is then it's meant to be lined because it will stretch and 'seat' otherwise.
You could try felting a scrap of it; cut a bit off, measure it and mark the sides (use knotted in coloured threads if need be) and then wash it in hot soapy water making sure to rub it around a lot. Then dunk it straight into cold water and then back into hot. Thermal shock, soapy water and agitation/pressure should felt it if it's going to.
The measurements will let you check to see if it has shrunk any, and if it shrunk more in one direction than in the other.
atb,
M