interlocking wheels with notches seems to be the most widely used method of shreading anything from paper to hard drives... a really simple concept, probably a pain to impliment

as its rubber strands your chopping i would have thought you would need contact between your interlocking wheels to "sissor" the rubber so at a guess id say that means hardend wheels or maybe belleville washers/ springs to keep tension on the cutting surfaces

to get consistent sizes of grain you will need a way of returning the rubber into the hopper untill its small enough to drop through whatever size grate/mesh etc