I have a handful of icelandic sheep and we've just done our spring shearing. Our shearer said she would probably just mulch the fleeces. It's true, they don't look great and I'm not completely surprised. Several of the sheep had started to molt. A couple of the sheep spent the winter mostly outdoors. The fleeces are a mix of white, black, grey, and brown (moorit).
I wonder if there's some other slightly more valuable use that such fleece can be put to than mulch, though. Anyone have any ideas?