I agree that making the quilt a little more square would look great. I have a quilting friend who was in a similar situation with vintage quilt as you are. She hand quilted it with embroidery floss using a primitive running stitch. It looked wonderful and added to folkiness (not a word I know), of the quilt. She used a light grey, which might work with this project. Make sure if you do use embroidery thread use DMC. Cheap thread will bleed.