It will dampen noise, it is similar to dampening material you can buy quite cheaply. But just be careful not to seal any vent holes inside your case. Also watch out for it to be in close contact with hot components as this may cause it to catch fire, since we don't know if the material you are using is flammable, unlike the dampening material you buy which has been specifically tested.
Dampening material may increase the overall temperture of your case and hence the cpu as well. Just keep a check on it and everything should be fine.