I probably wouldn't wash the blocks until they were assembled and quilted, and then I would wash with a quarter or half-cup of ammonia in the wash water. The ammonia smell doesn't last very long and I've never had it damage any fabric or dye. It's a good mildecide/mold killer and odor eliminator and it's a super cleaner of oily stains like you'd get from nicotine.
If the smell is really horrendous and you can't even deal with it long enough to put them together (I had a quilt top like that, once - ugh!) I would dip them into a solution of water and a small amount of ammonia and lay them to dry flat, handling them as little as possible.
When they're nearly dry, spray them with starch and press them square and flat. There should be no odor left in them and they'll be as nice to work with as fresh new fabric. :)