I used spray starch first, just because I always do on any quilt. I have used both a water soluble and a tear away. I am not overly fond of the tear away because it is a hassle to pull everything away. What I can't figure out is why you would need to use your iron after the first starching. Is it for the rest of the construction? I rinse the WSS out before I cut the block to final size so I didn't have that problem. I have also used a complete backing of polymesh when I was appliquéing on a very soft muslin. I couldn't tell it was in the fabric after I quilted the piece.
Note that my appliqué has only been on children's quilts, not very ornate high end quilts.
Pam