I agree that the 1930s soft colors would be a great choice.
I'd back the center panel with a washed muslin instead of a fusible, mainly because I wouldn't trust a fusible to last forever. I would probably use a dissolvable thread to baste the panel to the muslin.
I like the idea of bordering the panel before adding blocks. This frames the panel, plus you can make the bordered size a good one for adding blocks.
Not sure I would go the log cabin route for this. Perhaps some kind of star blocks? Or perhaps pinwheels.