This topic has been raised a few times on KH and I thought this such a good little YouTube vid about it (and note the classy way the copyright is handled) . The guys who have been this video together have some wonderful project instructions for silk screening and so on.
I started knitting with plastic bags a few months ago to make a beach bag for my mom's birthday. I had to quit because the plastic bags were making my hands break out in hives.
Well, the technique the guys show may be a way you could make the bag without all the hand touching knitting requires Terrible when that happens (hives I mean).