Now, onto the gnomes. The pattern comes from this book but I think you can manage to make them without the book. I used little wooden people bodies from here. They come in several sizes and shapes, including dwarfs with already pointy heads. I believe I used the "small wooden folk" size. I used wool-blend felt from a nearby quilting store, which is nicer to the touch and more durable than the acrylic craft store kind, but much less expensive than the 100% wool kind. But if you want to use the all-natural kind, try here.
Cut a rectangle of felt the height of the doll body and the length of its circumference. Wrap around and glue on. Cut a circle of felt about 1/4 or so bigger than the doll base; cut a small circle inside of that and cut out a wedge (like a doughnut with a bite out of it). Sew around the inner circle with a running stitch, wrap around the doll's neck, pull tight and tie off. The hat is basically a lopsided triangle, wider than it is tall and the two side pieces slightly curved (you'd never know I got an A+ in geometry would you? I can't even remember the parts of a triangle). Fold in half and sew the curved sides together. Glue onto the head. Wish I had pictures of the process, but fiddle with it and you should be able to come up with a passable gnome hat. You could probably do the whole thing with glue and no sewing, if you have the patience for the glue to dry.
Gnomes surveying the damage to their ransacked village. The one on the right E made by gluing scraps of felt around the body...even easier than measuring and cutting.