What's the point of white dye?
Bone Meal is also used to make Light Blue and Pink Dye (when mixed with a Lapis Lazuli and a Rose Red respectively). As to why you would need to make white wool, I don't know.
At least as of 1.4, Bone Meal applied directly to non-white sheep will turn them back to white.
In addition to being used to make other dyes, Bone Meal can also give you more white wool, but it must be applied to off-color sheep, not the wool blocks themselves.
*Tested on both red-dyed sheep and naturally occuring black sheep.