I love applique. I started out with the needle turn method and love it. Two years ago I learned a way to machine applique that looks more like hand. I have tried the fuse with satin stitches and don't enjoy doing that. I have tried the blanket stitch by machine and it is better but, I still don't like it for most projects. The way I do it by machine uses the invisible thread with a tiny zig zag stitch. That is what I am using on the Pieced Applique project. All of that to say that I know what you mean when you say you are running way behind schedule.
Lara, I think your thinking and ideas for how to use the AOTH blocks and how to still use the fabrics and love theme for your daughter is brilliant! There are times for me that a schedule or a deadline is helpful . . . . . there are times that it only puts pressure and quilting is supposed to make us happy~not burdened. The only thing I ask is to be able to find your PDA to keep up with what you are doing!?!?!?!?!