From reading through Max Johl's "United States Postage Stamps 1902-1935", I see that the source of WF coil waste stamps are from "stock of 170 subject sidewise coil sheets on hand at the Bureau which had been laid aside for mutilation because they could not be made into coils on account of some defect ...". These were initially printed/one way perforated in large rolls (see pic below), being 10 stamps wide but continuous longways (for endwise coils). Two rotary plates were used, each being 10 row x 17 columns, curved, then connected together on the "drum". There would be two lines showing where the plates were connected on the drum. So I'm assuming that a huge roll, having been deemed "defective" for making regular coils, would be hand cut at every 17th row creating sheets 17 rows by 10 columns with only vertical perforations (perf 10). To make these useable, these were then run through a perf 11 perforator then shipped out to PO's.
For some reason, I had always thought that the coil waste came from unusable "end sections" of the rolls - not from hand cut entire "defective" rolls which seems like an ENORMOUS job. Any expects out there that could shed some light on this? Also, what specific criteria would the BEP use to determine "defective" and unable to finish the process of making coils from that particular roll?