I agree with ScissorQueen, a hard pressing surface makes a big difference along with pressing seams open. A spongy surface doesn't allow you to flatten out the seams as well.
I put a couple of drops of water in the center of the block, front and back for the final pressing too. Let it soak in well and then press hard :D:D:D
If you decide to go with the applique, I would use a very light adhesive and blanket stitch around them. You could use a contrasting color for the stitching to keep your theme going :D:D:D