Hi Chris!
I do think that you could manage to truncate your descriptions a little. For example:
http://www.etsy.com/listing/123042867/owl-ornament-love-owl-hanging-owl?I'm not quite sure if a description is necessary if all you're doing is describing what I already see. If you're trying to advertise your materials, weave that into your sales pitch! Don't leave it with fluffy description.
An example might be:
"Hand stitched from high quality wool blend felt, this Felt Owl is stuffed with polyester fiberfill and sure to be a perfect for any occasion! Imagine those cute button eyes at a baby's birthday, or that lovely heart accent at a wedding shower! This Felt Owl is versatile enough that you can hang it anywhere! I, for example, have one in my carry on luggage...he is a well travelled Owl!"
I tried to incorporate the "selling points" of your description while making sure that I'm not JUST describing it. You don't want to just describe, because it's redundant considering how the potential buyer already has a picture to look out. You want to use those described features to CONVINCE the buyer to look at the item different--from "eh" to "gee, I can totally see that! I'll take it!"
As for tags, I would suggest taking out "heart" and "red"; single words, especially ones that broad, are going to place you in a massive market. You mentioned "party favor" in your description; why not tag it as that as well? Or "felt animal"? "Stuffed animal"?
I hope this helps! Good luck!
