I think that would work because the soap will still be able to breathe. There are shrink labels that are available from several places, one of them being BB. The ends are open. As for the shrinkage... yes, alot of labels will become loose on CP soap. Does not matter if they are paper or cellophane.
I have recently found a favorite video on you tube and she gives great tips on soap wrapping. It is omayra rivera. I will try to post a link, but my computer skills are limited!
http://www.youtube.com/watch?v=IUxl6T0y ... ure=relmfuI tried this, with cutting small slits in the wrapping. Both my mom and sister were impressed. Said I took my soap presentation up to an A+ !
For sure gives that soap the presentation of giving a 'special' gift .