I machine washed Pendleton wool yardage - in tepid (approximately body temperature) to cool water - rinsed in the same temp water - and machine dried on permanent press/low setting - and took it out of the dryer when it was BARELY dry.
Turned out beautifully. No shrinkage. No color loss. (I did hold my breath while I was doing this - I figured sheep get wet)
HOWEVER, if you want to SHRINK WOOL - over agitate it, use hot water, shock it by putting it in a cold rinse. Works almost every time.