Wow Joy, you did Edyta proud on this one! There is no mistaking her patterns and you executed this beautifully. I was fascinated by your description of how you appliqued it. I know Edyta's patterns (at least the ones in her Firecracker scrap book) she states fusible applique is her favorite method. What you described I have never heard of.
As for quilting, I would probably quilt exactly as Doghousemom suggested. With SID around the applique and pieced Peonies and then a fill behind them to get them to pop up off the surface. This top is already gorgeous, it will be downright spectacular when you complete it.