wool is a very luxurious batting but it does need special care, so it probably isn't the best choice for a baby. it will probably keep shrinking a little more each time it gets washed for a couple more washings, and if the parents aren't 'too careful, if you know what i mean', they'll put it into the dryer, too. myself, i would take the time to unsew, and i would replace the batting with polyester, a better choice for babies. AND i would keep the good stuff for a nice lap quilt for me.
it's a lovely quilt and such a heartache when something like that happens. so sorry.