I've been glue-basting my doll quilts and other small items for a couple of years now. No problems whatsoever. I don't dilute it or anything (I did at first, but I didn't feel it was necessary). I just run a tiny-beaded grid over the quilt top, lay the batting on top, and iron it to make the glue dry fast. Repeat for the backing. As long as you use only a tiny bit of glue, it doesn't soak through the fabric when ironed or make a big hard lump. (Note: If you're using poly batting, make sure the iron's not set too high or it could melt it.)
When I'm quilting the item, I can't even tell the glue is there. My machine never misses a beat.
I don't see this as being any different than sewing through Steam-A-Seam (and similar products), as long as the glue is completely dry.