I have made several quilts with crayons. They have laundered well and still look nice. Always use Crayola brand. Did the butcher paper coat your fabric with a waxy substance that made it crayon proof and would not allow the color heat set? I have never used the butcher paper, just white paper towels to absorb the extra as I iron the layers. I always do 3 layers of crayon and heat set between each "coat".