I have seen (online, not IRL) felted mittens made from "recycled" wool sweaters. The Family Fun magazine people felted the sweaters first and then made the mittens. There are lots of places where people tell you how to knit the mittens and then felt them (like the Mad River Felted Mittens in knitty http://www.knitty.com/issuewinter06/KSPATTmadriver.html ), but I wanted to cut up a sweater, sew the mittens, THEN felt them.

One lady online was trying to collect a bunch of mittens made like this and said she'd send the cutting template, but I didn't ask her because then I'd feel guilty not sending her finished mittens from said template. So, I took the measurements (or, more appropriately, the shrinkage percentage) and calculated (hopefully!) the size to make mittens for the kids.

The photo above is the pre-felted mitten, which is 13" tall and about 5-6" wide across the palm. They are made from the cuffs & sleeves of a wool sweater I got at Goodwill yesterday. I'm most worried that the thumbs won't be right. Cross your fingers! Stay tuned for the resulting mittens...