You should be able to craft/pick long grass into withered plants

there should be a way to convert long grass into withered plants. after all, if its long enough to slow down movement at all it should be long enough to weave into fibers

I beleive it can be cut to make straw, but withered plants are a different thing.

can it be cut with any tool?

You can harvest it with any digging tool or a scythe/sickle.