I have made several rag quilts and tote bags. At first I did use batting, cut smaller than the squares. The problem I had was getting everything squared perfectly so the batting did not show in the seams. I started using flannel and find that very easy, good weight to the quilt and great for that raggy seam. If you want you can use more than one layer of flannel. That way all the squares are the same size. It is easy and works for me. I do the X stitching on each block, but it probably would not be necessary. Just watch the flannel you purchase. Some of it is sort of thin and flimsy, but other flannel is thick and ravels really well. You can also add another color in those center layers of flannel that add an interesting touch.
Christine