Ok, first of all, YOU CAN'T DYE WOOL. You have to put the wool in the yarn maker first. Then put the yarn and an herb into the Dye Pot and you get a colored yarn. (I believe this works with all color herbs.) Though, I believe shiny yarn gives you more money.
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Take good care of your Sheep. The happier it is and the more hearts it has the more likely it will give you better quality Wool. Brush and feed it everyday. And let it outside when the weather is good.
They produce alpaca wool.
It has makers in it. (Can maker, wool maker, cheese maker, mayonnaise maker, seed maker etc).
After you put a couple flowers in the bin in the Town Square, she'll show up at the Flower Festival. After that, she'll come down to your town on the weekends, if the weather is nice. Huge storms make it so no one can do anything! After shipping a lot of things, jewelry, flowers and other things of that nature (maybe wool or something? Just ship lots of stuff) she'll eventually open the shop. :)
To enter you must have a healthy, full grown sheep that still has wool. You will win if your sheep has nine or ten hearts.