What are the stockings made of ?!!! What is that stuff ?!!! Is the stocking flat - can you glue stuff to it - can you push things into it - will paint stick to it - is the top open, like a real stocking ---- ?
My thought would be to carve (maybe I mean to indent) a quilt block pattern into the surface - use wide ribbon or fabric strips - cut into shapes for your design - try to push the edges into the indentations you made...... I think this method would look "quilted" and using holiday ribbon would be pretty. Add sequins and other embelishments.... It's hard to explain what I'm talking about, but I hope this helps jumpstart ideas. Good luck, I hope you win the contest...let us know.