InMySpareTime - here are my thoughts.
I like the idea very much, and I'd like to know more about the story and what's going to go on. Im guessing we're in a medieval, magical world, and something exciting is going to happen, and I like all of that.
I can also see what you mean about the word 'and', given your particular style.
However, I wonder whether, perhaps because you can picture the scene so clearly, you're at risk of being a vague about what the reader doesn't know, and telling the reader too much about what they do know.
So there are some things that I'm not told, and which make it difficult for me to imagine what's going on - most obviously, in what building in Boravia this magical tapesty is hanging. In a church hall? In a palace? In an art gallery?
I also think that the reader gets the message (because you're picking up on lots of collective fantasy understandings that we already share) that it's a magical tapestry a good deal quicker than you give us credit for. The result is that effectively we've got sentence after sentence, all telling us the same thing - it's magic because you hear things, it's magic because you hear things, its magic because it changes, it's magic because it changes, it's magic because it knows when people dies. Oh yes, and did you get that it does this magically, not because people are popping up and re-sewing it?
I think you could get the same effect on the reader from about half your current sentences - your reader's imagination will then have more time to do all the filling in. Plus, I think that the sentence with impact is the one about the dead soldiers closing their eyes, not the one about the tapestry being set up National Trust style with small ropes preventing people from getting too close to it.
There's also a repetition in one sentence, which I don't think works (famous tailor / famous battle).
So I think you could cut it down as follows:
e.g. "In the palace, there hung a tapestry, created by the famous tailor, and depicting a great battle. The work was so skilful that, viewed by moonlight, the clash of weapons and the cries of the soldiers could be heard, resonating from the very threads. Once, as the Boravian army rallied victorious in a hard-fought battle, their standard was seen to unfurl within the tapestry. And, as the veterans from the fight died, of injuries, disease, or mere old age, their tapestry counterparts closed their eyes."
Then you've saved yourself about half the sentences and you can get right on with telling us about the exciting thing that I know is going to happen next, because I think there's going to be magic and battles and heroines doing kick-ass stuff, and I like all of those, and I want to hear about them now, not find out about the Boravian Ministry of Culture's tapestry conservation policy.
Does this make sense to you?