I use silk thread for hand piecing all the time- it is so fine and smooth- a joy to work with and you do not have to worry about that whole *scant 1/4"* it is fine enough to not cause that whole (thread taking up space in the seam)
I also use it for applique and quilting. I love using silk thread. I understand some of the comments about not using it for machine piecing- but I think it's just because it tends to be an expensive thread- and people tend to use it for either decorative applications or for hand work. I do use it for machine applique and machine quilting without a problem- (when using it for machine applications I generally have either aurifil or a cotton thread in the bobbin- using the silk on top. use it any way you want- it's a wonderful thread!