I do have the packaging and it says 8", and the widest spaces are 4.5"-5" around the fairy tale squares, the rest is all closer. It also said to wash it on the delicates cycle, which I did, and I didn't dry it.
I wrote to the online shop I got it from advising them of the bearding, which i think makes it unsuitable for crib quilts, but haven't heard back. This is the last time I will even attempt wool batting. I have a few projects lined up for practice and think I'll stick to cotton or old fleece blankets.
I will try damp-squaring, but don't have much hope. If I gave it to the new parents it would probably just go wrong again every time they washed it, and they aren't the most careful people if you know what I mean.