Question: I am relatively new to wet felting and was wondering if you could advise me of a way to incorporate some flexibility or stretch into felted wool or a felted object. I want to tackle felting leg warmers that reach above the knee. I am looking for wool/fleece with lots of "spring back" and/or a certain method of felting.
Wet felting will give you a rigid fabric every time, regardless of wool type and so having true stretch for a tight pair of leg warmers wouldn't be possible with wet felt making. The rigidity comes from the way the fabric is made up... a tangle, or a knotting of fibres forming a rigid mass.
I did find a tutorial which will show you what I mean... and here they make felted leg guards http://www.craftster.org/forum/ - felting leg warmers. These would remain a stiff fabric, but could be pretty. To make these you can use any wool fibres.
To make them above the knee you would have to create a pattern of several pieces so that they could move in a jointed way. My fear is that that might look a bit like armour if it's not very carefully designed.
If you wanted a more traditional leg warmer look and you wanted to use wool, then I recommend felting an old sweater... here's a tutorial for simple cut and sew methods diy-old-sweater-into-new-leg-warmers and here's a knitting pattern http://www.ravelry.com/patterns/library/leg-warmers-21. A knitted fabric would give you much more stretch and drape because the 'elasticity' is in the way the fabric is made up (although some wool fibres seem to have a natural elasticity, it isn't something that correlates to this situation, because it's what we asking the fabric to become, not the fibre). Again you can use any wool fibre here, but I recommend a yarn with a hint of nylon in it as this will help hold them up above the knee. I do have lots of suitable yarn here... yarn-by-weight
So my recommendation would be to avoid felted fabrics and go for a knitted fabric instead for above the knee leg warmers.
A felting technique you could look into, as an aside is Nuno felt, which is the process of layering fabric with wool fibres... but the problem here would be that the fabric needs to be open weave (to allow the fibres to knot between the weave structure) and as most stretch fabric bases (being knit fabrics) don't have any openness to their weave structure you would have to go for a non-stretch fabric base, like chiffon. Again you would need to be clever with seaming, darts and 'jointing' the construction... I'm not sure it would give a 'beautiful' look.
I hope this helps.
Have a wonderful day,