I am just finishing a memory quilt and I used the same t-shirt transfer paper that you did! I accidently touched one of the pictures with my hot iron and it was damaged too. I ended up pulling off all the photos that were damaged and re-doing them! Then I stitched around all the transfers. I fear it will not hold up after all the time and money. Guess we have both learned an expensive lesson. Next time I will transfer my pictures with ink directly onto the fabric!