My preference is freezer paper applique with edges turned under and starched. I don't care much for the buttonhole-stitch look, it's not my style.
My friend took a Sharon Schamber class where she learned Sharon's method of applique: she pre-washes (and therefore pre-shrinks) her applique fabrics, but NOT her background fabric. She topstitches her appliques with a very small stitch, close to the edge. When she washes the quilt, the background fabric shrinks, pulling the applique in and under the stitching. I don't know if she washed the top before quilting or not, but I would think she'd have to, to get the applique edges under. I'm fascinated by this method and have always wanted to try it on something small.