I've been interested in trying this for some time. I'm going to gather my materials today and give it a try. I assume that I will need to satin stitch around the applique after ironing it on, as usual. Some people use liquid applique or fabric paint on the edge, but I find it easy enough to just stitch. I'll let you know how it goes.
Check out this website for some helpful tips:
http://mycricutscrapbooking.com/tag/fabric/. (Sorry--the link doesn't seem to be working, so you will just have to type this in manually.)
update you later, swr