What I do with the freezer paper is...
I trace the item I want to applique onto the paper side
cut out the shape then iron the waxy side down on my fabric (right side down).
Cut the fabric around the freezer paper leaving a 1/4" allowance.
I try to iron the allowance over the freezer paper, but this is the part where I mess up. I can't make a good enough seam to iron to so that I can stitch it down.
After that you take the freezer paper off and iron on the applique onto your background at the seams