That really is inexcusable! I do embroidery and quilting, I would think that the suggestion to press out starch and closely stipple around it would be the best possible solution, and if your not happy you could still do a banner and applique it. You have worked so hard and I'm not sure I would let the embroidery shop touch it again, but I would definitely let them know that the work was totally unacceptable and you should be given your money back (which they should have never taken in the first place!!) Just think not only will you never go there again, probably no one you know, after seeing what they've done to yours will ever go there either. I know I wouldn't!!! Good Luck and let us know how it all turns out! I bet you rescue it.... it is a very nice piece.