I bought that same exact yarn, color too. Peony right? It's very pretty and soft. It was intended for a Christmas gift scarf as well.
I've knit about 7-8 inches of the scarf but I've let it sit unfinished because I'm so discouraged with the shedding. I typically do the bulk of my knitting on my train commute to and from work and my pants were covered when I got there!!
And like you, I'm having second thoughts on giving someone something that's going to shed all over their coat.
I did read on someone's blog that they swatched with it and the shedding problem was diminished after they handwashed it. I haven't tried that myself. I'm considering just getting some Caron SS for the scarf, which is also reasonably priced and is washable. I don't want to spend alot of money on the yarn and the more I think about it I don't think the recipient will hand wash.
If you google search you may be able to find that blogger. If I can find it I'll post the link.