I just successfully smoothed this out so thought I'd share it. See attached photos for reference. I set the iron to a lower temperature with strong steam. Then slowly start unfolding it (paper side up!), about 6 inches at a time. Put the towel on the unfolded part and iron the towel. I kept the iron moving while it was down and did about 10-15 seconds for each section. Slowly unfold the paper under the towel until you're done. Light! The first few inches and the last seem to be the driest and most brittle. It took me about 10 minutes to make 4 rolls and that's because I made the first 2 rolls cedar side up and they ended up getting wobbly/curly so I had to redo them. Do it paper side up and they come out perfect. have no cracks or large parts fall off. There is some chipping from very thin pieces but it just comes with the grain. If anything, it looks more natural and less like wallpaper.
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