I have used the blind hem stitch for applique, but I also use the blanket stitch. Sometimes I match the thread to the applique piece, sometimes I use a contrasting color..and sometimes I use a blind stitch and use a monofilament. It all depends on what I want the look to be.
I've also used the dryer sheet method for applique. It is similar to Klue's method..using dryer sheets vs. the interfacing.
There are as many ways to do this as there are people to answer your question. I'd recommend that you "test drive" some methods to find out what YOU prefer the best and ....thats how you do it. :D