Angelica, I dilute it. Here is a thread in which I explain what I do:

How do you use tea tree oil?

See post #4 for what I do.

Or you could add a few drops to the cowash, yes. The smell is pretty strong but it washes out of course and disappears if you dilute it sufficiently before applying on maybe 2nd or 3rd day hair.
3A - C, HP, ME, HD. (Coarse, High Porosity, Medium Elasticity, High Density.)

CG since Nov. 2012

Poos: SM Moisture Retention + Yucca Baobab, TJ's Tea Tree Tingle
Condish: TJ 'sTea Tree Tingle*, SM Moisture Retention* + Curl & Shine + Yucca Baobab, Yes to Blueberries
Stylers: KCKT*, SM Curl Enhancing Smoothie* + Curl & Style Milk*, KCCC*, FSG*, CJ Pattern Pusha, Curl Keeper
Sealers: Jojoba* or Grapeseed* oil

* = HG