I made one long before there were LEDs.....i made button holes in the "tree" that were about the distance apart of the twinkle lights on the string and poked them through the holes - then plugged them in. Mine was smaller, so i only used a 50 light strand....but it worked great.
I also made a small one and did use the battery powered lights as it was going to be hung higher up on the wall. Put a pocket on the back to hold the battery pack -- they can be heavy cuz some need D batteries.
Are you making any quilted ornaments??
Good luck...don't forget to sent us a photo please - i'd really like to see the final project.