First of all; it doesn't matter where you put the cotton; all of the unfinished edges will end up on the same side of the quilt. It just (or shouldn't) fray as much as the flannel. I think two layers of flannel would be enough but do a test sample; sew a couple of blocks together and wash and dry them and see if you like the effect. I have the Accuquilt cutter and that is a fantastic thing when doing rag quilts. The center of the blocks can either have the traditional X down the center and then straight stitched around the block next to the cut edges or you can put a design on them. I made a baby quilt and put appliques on the backside so that is was just as pretty as the front.