I have used Ghostrider's method with success even doing 1/8" borders. I use Fray Check on the seam allowance, because I think such a small seam allowance is asking for trouble.
Concerning the issue of maintaining straight seam allowances, the problem is solved on Ghostrider's method by taking a bigger seam allowance than needed, and then trimming to exactly 1/4" or 1/8" (whatever you want) with the ruler and rotary cutter. Then the seam allowance, which becomes your stitching guide is straightened out for you.
Dayle