what ever stitch YOU like is fine- personally I pretty much never satin stitch around appliques- I do not like the heavy/stiff ridge of stitching. but that is my preference- some people always satin stitch- that is THEIR preference. I generally either do a blanket stitch or a small zigzag- maybe you could just put together a little *practice block* and try out a few options, decide what YOU like - then stitch your block- it is adorable by the way.
