Does anyone know how I could allow my data in the fo:list-item-label to wrap. I might have some custom bullets which are very long and hence need to be wrapped.
Wrapping in list item labels works tha same way as everyway else. You have to set up the end-indent property of the label as well as the list specific properties on the list block correctly. The spec explains this reasonably well, with examples: http://www.w3.org/TR/xsl/slice6.html#section-N17081-Introduction
You also have to provide opportunities for line breaking breaking. If your labels are long words without whitespace which overflow the available apsce in the line, you should arrange for hyphenation or insert zero width space (see FAQ 3.8 at http://xml.apache.org/fop/faq.html for hints). If your labels are really wide images or glyphs, you are out of luck.