A dress can be made out of almost anything, just takes a good designer and seamstress. I have seen them made out of more outlandish materials. Lady Gaga had one made out of raw steak.
Tinsel in some form reoccurs about every 2-3 years. Watch the Fashion Rags over the next 3 weeks as Paris shows are done, Shanghai and Milan are next up on the docket.
Sure, anyone who can sew could. It would be uncomfortable if woven, knitted or crotcheted. If you sewed it to a backing cloth you could turn it into items for fancy dress parties or cabaret acts.