I've used that outside of the cage for playtime, The smell does go away after awhile - i haven't noticed that washing them will help any with that. if you can put it near a window or outdoors in safe place where it wont get rained on, etc, the smell goes away in a day or two. it will always smell like vinyl but it wont' be as strong after a couple of days of being out of hte pkg.
There there's a wire going thru it that can have sharp ends, even when you twist them back and over on themselves (not sure i'm explaining that well) so you have to watch for that.
my rats have always chewed thru these pretty fast but they have also loved them. if you have older rats I would only lay it on the floor of the cage, not hang it, because once there have chewed holes in it, the vinyl is flimsy and they can easily fall thru even close to a smaller hole, not a full sized one.
do you ever get canisters of like, oatmeal or something like that? those make good tubes/tunnels for in the cage.