i have never done hand applique, only raw edge machine, and dresden plate table runner with fusible applique that has the finished edge. I have used clear thread when the fabrics were multi-colord and also thread tht matches the fabric (not the background fabric). I have used a larger blanket stitch and i have used an almost invisible small blanket stitch. You can use contrasting thread if you want that look. You really can do anything you want with applique - if you want a certain look, then change your thread color, and the size of the stitches!