I do not hesitate to reuse unravelled yarn, sometimes even washed yarn from test pieces. For the most part, I knit with wool and it is very forgiving.
The following pictures show an item that was Reknit using the crinkly yarn. I knit it as is, off the hand rewound ball, washed the hat, hand manipulated block and let it dry, then gave it a quick steam finish.
The yarn is Lett Lopi. I followed a pattern meant for the regular thicker LOPI and it turned out child size. 18″ circumference and 6 1/2 height without the ear flaps. Cast a total of 70 st on a 4.5 mm needle.