I just finished doing a small quilt of my daughter riding her horse--if I can get a photo I'll upload. I quilted first and then added the Derwent Inktense and set with a DRY iron (steam will make it bleed just like water). I wanted the colors muted for this one.
On the Michael Miller COLOR ME fabric (my LQS has both the Christmas and the Halloween ones) I'm coloring first, then using aloe vera gel (no other additives and not lotion) to go over--it both sets the color and makes it much richer and brighter--plan to use this for the fronts of Christmas stockings for g-boys--will quilt around the designs first, then cut the stockings out.
My sister used that water soluble, adhesive transfer paper on a recent embroidery project and then figured out she could not use crayons as suggested in the pattern as the adhesive paper blocked it and she worried about the crayon wax gumming up the floss. So once she removed the transfer paper, she used the inktense pencils and she used water as wanted muted colors--but blended with a small brush and dampened q-tips. set with heat.