I've never heard of this either it is an interesting custom - I grew up in a small town and was best friends with the undertaker's children and the cemetery custodian so we were always very curious about what was going on. We were always taught to respect the deceased and not make noise, etc I learned alot back then about what happens but I've never seen the pillow before, I've seen the flowers that drape the casket but never an actual pillow with flowers.
When my grandma passed away we placed a single red rose in the casket with the great grandchildren's names attached with a piece of fabric these went in towards the end of the viewing. I love the one that you made it is very beautiful