I used the pigma pencils that I took a picture of and posted on my blog. I've seen them at Michaels and JoAnn, and you can buy them in a box or one at a time. I did have to do that with a couple of colors - the green and yellow - since I've used so much of them. I'm really only using about 20-25 of the colors in the box. But you know how it is - the bigger box of crayons is the best!
The extender (the liquid stuff that binds the pigment to the fabric) I've purchased from Dharma Trading Co, the link is also on the blog. I've blown through the 2.5 oz bottle, and just ordered the 8oz. (Translation: I've run out and can't color until more gets here!) With shipping, the 8oz was less than $12.00. You may be able to find it locally. Where I am nothing is local, so I do lots of ordering on-line.
I haven't tried any other methods, this is my first attempt. It was CRAZY to do this on such a big project, but I do love how it is looking. Thanks for your nice comments and encouragement!!