tkhooper, I think the applique sounds totally cute and an apropos solution. As for the quilting: make sure to go slow. Slightly tuck the seam apart which gives your needle a better chance to land in the ditch. If you don't want it to show at all, use monofilament.
On the patriotic quilt, I actually used the FMQ foot to ditch the seams. Yes, there are small areas where it is more of a "drunken meander along the ditch" (lol) but I think once washed, nobody will notice.