1. Unwind the yarn into a skein and tie it up in a few places to keep it neat. I just used the back of a chair.
2. Soak the yarn in cool water for about an hour.
3. Mix your Kool-Aid. You can get very precise with it, but I just sort of played around with things until they looked interesting. No need to add sugar. Just the dry powder and water. Some people add vinegar, I didn't.
4. Pour the Kool-Aid over the portion of the yarn you want to color and microwave until the liquid is clear. I went with 4-6 minutes per section in 2 minute intervals. In between, just stir the yarn/liquid again a bit.
5. Keep going until you've added all your colors. It's okay to overlap them a bit. Personally, I like that better than having any of the underlying color show.
6. When you're done, gently wring out the yarn to remove excess liquid (and be careful -- it'll be hot!).
7. Let it air dry. So far, this takes 18-36 hours for me, but that's just leaving it all inside. You can only dye animal fibers with this method, and I didn't want to place the yarn in direct sunlight in case it would shrink. I don't have any fancy equipment for drying, so I just used the handles of an exercise bike in the garage and rotated the loops a bit every few hours.
8. When the yarn is dry, you can twist it right up into a skein and be done.
9. Or you can re-skein it if you want to see the color distribution. Like I said, I don't have any fancy equipment, but the backs of a couple chairs work relatively well.
10. Re-twist and you're done.
A couple things I've learned so far: 1) your yarn is going to smell like Kool-Aid unless you rinse it really, really well. 2) Unsurprisingly, most of your colors are going to be very bright (it's hard to find all the various flavors, especially the ones that temper the others). 3) Yarns all soak up the liquid differently, so it's okay to experiment until you find one you particularly like. Sometimes you'll get a very uniform look, other times it'll be more variegated. 4) Using the process to complement a pre-existing dye job can lead to some easy, striking combinations. 5) It's so very addicting.