You can embroider on clothes, towels, aprons, socks, hats, totes, etc...
You can make free standing appliques and sew/glue them on, rather than embroider them onto the items.
Free standing lace is fun, as well as in the hoop projects.
http://www.emblibrary.com check out their tutorial and project sections, they have a lot of tips/hints there too. A great informational site :D:D:D