uhh I also had a short weaving episode :-D But I tried to weave on a handmade cardboard loom. Oh horror.... The episode was very fast over.
I think you can use the softer yarns for every project you like. The only difference between yarns I know is, that rug-yarns have a different (stronger) twist. This leads to a rougher and more durable fabric. It is possible to use this rug yarn for knitting or crochet, but it will feel a bit coarse.
I thought about the texture as well. I guess as long as I use it for something like foot wear or household items, then I should be good. Thanks for sharing.