Wow, what a fun quilt! I think I would just go with a blue binding, no borders. As quiltmaker101 said, you would have to undo a lot of the quilt to add any border.
Do you think maybe the fox in the fabric is really the big bad wolf? That would explain the 'tools' as belonging to the 3 pigs. What the heck, let's just make up a story to go with it! lol