Feeling felt guilt

Here in NSW, even though spring rains brought the dam supplying Sydney's water up to a whopping 50% + capacity (for the first time in yonks), we have a drought on. I've heard it called the worst drought ever on record in NSW but I'm not sure if that's true. Anyway, there are water restrictions on, which don't really affect me as a rental tenant in a unit - no grass to water and no place to install a rainwater tank etc - but we still do our bit - bucket in the bathtub to catch extra water from the shower that can then be used to water the houseplants, living without cold water because it's impossible to turn our tap off all the way without Herculean effort, only doing one load of laundry per week maximum...that sort of thing.
Laundry brings me to the point of my ramble... felting. I have some yarn that I salvaged from an old made-in-China aran type jumper Vinnie's purchase. The tag says 100% wool and to hand wash or dry clean. So I assume it will felt, yes? And it is a pretty poor quality yarn - scratchy and losing its 'spin' (whatever you call that magic that keeps the strands twisted together). So a felted bag could be just the thing. Something like the French Market Bag is what I have my eye on. I even dyed the cream/stale nicotine colour wool to a lovely continental bluey-grey in anticipation of my ever so sophisticated FMB. After previous felting disasters which are too grotesque to go into here, I decided to make a swatch and test for felting capacity. Here is the result.

You probably can't see it in this picture, but honestly, there is some tendency of certain fluffy strands to cling to other fluffy strands here. And look at how the top is wider than the bottom - I swear they were the same width when I started. I would like to think that is evidence of felting. But where have I gone wrong? My method was as follows:

1. take swatch to laundromat with a load of beach towels that needed to be washed anyway. You wouldn't expect me to run a full load of laundry just for one little swatch would you? We've got a drought on!

2. run machine on hot with about a 1/8 cup of my usual laundry powder for the full length of the cycle

3. remove wet items. Hang towels out to dry on the clothesline and leave swatch to dry flat.

Since this unfortunate episode I've found out through some web research I did a few things wrong:

1. I don't think there was enough agitation caused by the couple of beach towels. Although I've heard jeans are good, I've heard that old sand shoes are even better. Also, I've heard that I should have added something to the water - was it sodium bicarbonate? - for agitation. I think I read that in Yarn magazine.

2. I shouldn't have let the machine run through the full cycle. But the problem with using a laundromat machine is that you can't really just stop it and start it all over again.

Now, my query is this. Should I continue attempting to felt the swatch before continuing any further on knitting up the bag? Bear in mind this would require a huge waste of water not to mention laundromat tokens. Or should I just take a chance and knit the bag and keep my fingers crossed that when the time came, the felting would miraculously work out. Come to think of it, how do Aussie knitters justify the water used in felting at all? Do you feel felt guilt the way I do? Or is felting just not for me - that is, until I buy a house with a washing machine in it or move to a less drought-prone land? Can anyone rationalise this for me?