You could use Plymouth Encore Chunky (14sts/4") or Lionbrand Thick and Quick (9sts/4") which may be available at Michael's etc. Both are easy care which is good for baby blankets.
The selvedge stitch is just an edge stitch. You can knit the sevedge stitch every row for a beaded edge or slip the selvedge
stitch at the start of the row and knit the selvedge stitch at the end of the row for a chain edge.
It's a great pattern and will certainly make a scrunchable blanket in the heavier weights. I agree with GG on the swatch. What weight is the baby yarn that you have?