Well, I was wrong.
The yarn was just vile! The colors pooled horribly no matter what I tried to knit. It sat in my stash for quite some time and then.... Duh! It occurred to me that I should overdye the yarn!
Below is a sample of the yarn before dyeing. Although bright, it looks innocent enough until it's knit.
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I dyed it using blue food color but it wasn't quite dark enough and I ran out of blue food color, so I dyed it again, using blue and purple kool-aid. (I hope the grape kool-aid smell will leave my house soon!)
The next photo shows a swatch that is knit with the original yarn in the top half and the dyed yarn in the bottom half. You have to agree that the dye job is a big improvement. The original yarn was unusable due to weird stripes of ugliness.
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And finally, here is a hank of the dyed yarn. I plan to use it to make socks for Mittens for Akkol.
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