The old russian army greatcoat can be waterproofed to some extent and at the same time made less "itchy" by soaking it in a special solution. I don't know the recipe, but I recall that after the treatment (and drying for several days) it becomes much heavier and stiffer. Also the wool's color becomes somewhat brownish.

Sure thing, it's not a substitute for a good sleeping bag, but I'm pondering an idea to use a sleeping bag in a "skatka" manner to store and wear the gear. Perhaps, with a nylon tarp or/and hammock as an outer shell. The ideal backpack is no backpack at all.