Woollen cloth Irish plunged in Kentucky lake (10)

I believe the answer is:

kerseymere

I'm a little stuck... Click here to teach me more about this clue!

'woollen cloth' is the definition.
The definition suggests a singular noun which matches the answer.

'irish plunged in kentucky lake' is the wordplay.
'irish' becomes 'erse' (old-fashioned term for the Irish language).
'plunged in' is an insertion indicator (I've seen this in other clues).
'kentucky' becomes 'ky' (abbreviation).
'lake' becomes 'mere' (mere is a kind of lake).
'erse' going into 'ky' is 'kersey'.
'kersey'+'mere'='KERSEYMERE'

Can you help me to learn more?

I've seen this clue in The Times.

Want a hint initially instead of a full solution? Install my app