Blue,
This is absolutely gorgeous!! I am really bad at applique so I bypass those patterns. Like anything else, I guess the only way to get good at it is to practice practice practice.
Regarding quilitng... When in doubt (worried about ruining) I hand quilt. I feel I have much more control hand quilting but again I have not practiced my FMQ enough to feel truly confident. I would echo stitch around each cat. I like the idea of paw prints in the sashing as well.