Very cute, love the color choices. I'm not sure where the cutwork is. Is the dog's feature cut out. Normally cutwork is done with thread and using richeu (not spelled right)bars. I've done it by hand but my machine has the special needles and so its so much easier on an emb machine and using the cutwork needles. It is very cute and will make a great wall hanging
How about making the heart small and down in one corner on the same block as the dog, then it would be there but not take center stage.