Thanks for the comments and pointers guys! I also got a good PM the other night and a few follow ups that were REALLY helpful so I thought I'd post an update on this thread.
I took some little clumps of wool and rolled them into a 8 short and fat little rolls, about the diameter of a Tootsie Roll but a little wider. I separated out the three string bundles and put 4 of them into the braids and squenched them closely together. Here is the raw material and the initial placement of the wool.
So that was pretty ugly. I got my hand a little bit damp and twisted the wool with some friction until the fibers just started to come together (not a full on felting.) I dried them off a bit, then worked the wool for another minute or two to come up with this.
I kinda like it! I shot it dozen times or so, gave it a little trim, a little more felting, and a few more shots to get it all settled in. Now that tiny bit of string buzz is gone and it's even quieter than it was before. Final product!
It certainly didn't absorb the water, it is very repellent naturally. I'll shoot this a bit and see how it works out in the long run.
The method described in my PM would be great for continuing this technique for a couple more inches to make a long slender silencer which sounds really ideal for a recurve with noise problems. I though anything more than this might look goofy on this bow.
Thom