Here is a small tweak that returns to your game the ability to produce wool from sheep, just hitting them. This feature existed in earlier beta versions of minecraft 1.7 and was successfully removed during release.
How to install Punch Wool Off Sheep Mod
- Download and install Minecraft Forge
- Download mod
- Do not unzip it, copy to C:\Users\User_Name\AppData\ Roaming\.minecraft\mods