Our very own Joanna recently posted a new discovery to her blog - how to possibly recover an overfelted item! It won't "unfelt" an item, but it will relax it some so it may still be salvageable, as it was in her case.
Read all about it here:
Thanks for sharing, Joanna!
(P.S. - You can bask in Joanna's awesomeness, in person, when she teaches in the shop. Stop by and ask about her next class.)