I use varigated thread every chance I get. It looks great on wholecloth. As for the wool batting, I understand it needles beautifully as the wool contains lanolin. It shouldn't make you itch as it is in the sandwhich. The last quilt we raffled off at the senior center was a stack and slash that made stars out of bright primary colors. We sashed it in black and quilted it with varigated thread. It looked fantastic.