I think kids use too much toilet paper because they don't want to get the poop on their hands. I would switch to the flushable wipes - we use them for all of us. They don't rip, and she can use one wipe, then follow up with a second. She can use a third if necessary but at least they are all separate and not in one big wad in the toilet. When the wipe is clean, she's done.
Telling her that all her underwear needs to get thrown away or that people will get sick if it gets washed might have worked at one point if she really cared about her underwear. It sounds like now she might be so afraid of the germs in the poop that she doesn't want to go anywhere near it. If she's too scared, she'll just avoid it completely. You might start involving her in washing her own underwear. If it's a hassle, she might avoid it by wiping. Rinsing it out in, soaking it (get a plastic soaking bin just for this purpose), applying stain remover, and running a washer, plus drying and folding - might do the trick! Don't get all agitated about it - even though it's really agitating! Just calmly and matter-of-factly tell her that this is what we're doing now, and when she learns to wipe, then you two can spend the laundry time doing fun things like a hike or a day trip or whatever. It's in her power but there's not much else you can do other than take away her fun because she has to do laundry or get showered off.
After all, when you changed her diaper, or when you clean her off now, you don't throw your hands away! You just wash. Same thing with washing soiled clothing - get rid of the solid poop, then wash away the rest with soap/detergent.
Then teach her to properly and thoroughly wash her hands with soap. It's the lather & bubbles, plus the rubbing, that do the trick for handwashing. This is a good technique anyway because all the schools are pushing handwashing due to diseases like swine flu. Teach her to sing the Happy Birthday song twice (or ABC, her preference) while she is washing and rubbing. Do not let her do this under running water - turn the water off and just rub, then when the song is done, she rinses.
Be sure she knows how to wipe properly so that there's no bacteria transfered from anus to vagina/urinary area. At this point, you might not want to scare her - just tell her she wipes pee in the front and poop from the back. Two separate wipes.
I agree that some diaper cream might help with the healing in the short run, but getting her really clean should be her goal.
