I'm doing the same thing (same punch and felt source), except I use a different lube. I use a mix of paraffin, beeswax (we used to keep bees) and lanolin. I put the felt and the lube in a pan, and into the oven at 190. In a few minutes the felt has absorbed it all. Then, I shake them out before the lube stiffens.
Why do I do this? In my LGS, wonder wads are 10-cents each!!!
The next time I need to make more wads, I may try lubing them prior to punching. Oh, I don't punch on an old stump, I use a catalog or phone directory.