Would your challah cover be something that you wanted to be very opulent or more homey? Looking at images on a Google search, they seem to run the gamut (and thanks for helping me learn about something new to me today!) Perhaps a crazy quilt design, with fabrics and embroidery that are meaningful to your family? For a more traditional quilt pattern that would translate to a smaller size, you might look for doll quilts or miniature quilts to get some ideas. Just about any pattern can be downsized and made brighter with different fabrics.