High pH on wool can cause dye migration but from what I understand it damages the wool at the molecular level by damaging the cuticle of the fiber.
I've used Microban Clean Carpet Sanitizer for mold on water damaged rugs. The mold is hard to remove, but I've found a filtration soiling removal product removes it the easiest. However you have the issue of that being a high pH product. If there is minimal mold contaminant on the rug it would be worth trying to restore. However if there is a lot of mold, you would be better off talking with the homeowner/insurance about replacement, and just give them your profession opinion that it cannot be restored to pre-loss condition. You also have the issue if there is a backing separating, and it needing to be replaced. The time and materials going in replacing the backing plus restoring the rug sometimes is greater than replacement, and there is no question of if the homeowner will accept the rug afterward.