Thanks, everyone for the comments. I'm using 1.5 stitch length but the pieces are small, some an 1" square. On the longer stitched strips, the paper comes off fairly easily but those small pieces especially those stitched on four sides are the hardest.
I'm going to go to some of the dollar stores tomorrow to see if I can find the newsprint-like paper. Using the WashAway would be too expensive for the project I'm working, and its just a wall-hanging! There was only eight sheets in the package so I thought I'd give it try. Chris