It sounds like it's going to continue to 'grow' no matter the knit should you frog it

so, if you experiment with felting it, as you said, you could then cut it & do something with the felted fabric should it not work out to your liking. But, if it were me, with that beautiful yarn, I would frog & make something beautiful to be felted. I just think that the yarn is to gorgeous 'not' to know how it's going to turn out should you play with felting as a sweater when you know you could really do something gorgeous as a planned felt...know what I mean?! Gosh, that really sucks, I loved that sweater & that yarn is just too gorgeous to have the nerve to do the fuzzy growth

!!