I understand your concern. I get concerned when I see kids carrying backpacks with their first names embroidered on the back. Too easy for a stranger to seem he knows the kid.
However, I don't see the same danger with a baby's name on an item unless the child is still carrying it around in public at the age where a kidnapping might be done by a stranger speaking the child's name. Someone who wants to snatch a baby doesn't care what their name is.
That being said, I would make the quilt per the mother's wishes. No doubt she has spent countless hours dreaming of her child's name and the joy of calling her own baby that special name. To see it sewn into a handmade quilt is a lasting joy.