Fabric Strips to Rag Rug, Combination of Fabric and Knitting

I read a blog named The Pea Pink Rose Garden, or a ervilha cor de rosa  in the author's native Portuguese.
Her March 4th post is very cool. (link is to an English translated page). She showed photos in enough detail to teach the making of a rag rug using strips of fabric and knitting. (Please note the technique used for knitting is the type where the yarn is held around the back of the neck. To emulate, simply add the strips when working the purl side of the fabric in whatever technique of knitting (Continental, English, Combination etc) you prefer.
The knitted rag rugs I am familiar with consist of making strips of fabric then sewing them together to create a fabric yarn, which is then knitted with standard techniques. These rag rugs are very different. The strips are cut into equal lengths and perhaps half inch wide widths (the text says 3 cm) (I'm guessing the fabric is torn to separate the widths). then as you knit along, from the back of the work you wrap a strip of fabric around the yarn in a similar way you would snug a bead up close to the work, then you continue knitting until it feels like the right time to add another strip. It gives a very cool shaggy appearance to the created fabric.

From the english translation and the photos provided, it appears you knit some stitches to get in from the edge, then place a strip of fabric between the needles so that it lies on the knitted work from front to back. Take the next (purled) stitch as usual which traps the fabric strip. Then take the back part of the fabric strip and flip it forward between the needles and take another purl stitch to secure it.
I encourage you to visit Rosa's blog yourself, the photos very clearly show the steps involved.
(Photo above was taken from a Postcard published by the Association of Ethnographic Montemuro, which Rosa shared via Flickr)