that's really cute! I'd probably put that plaid around as the border just like you show it and then "SID" around the blocks/borders and then around the whales. Then around the top and bottom whale blocks I'd maybe so swirls that would be like waves and on the solid blue whale block (to divide it up) I'd just do straight lines fro the navy border to navy border . But I wouldn't actually quilt the whales, just around them so it looked like applique. On the plaid border I'd just follow the plaid design, maybe about every other row?
I didn't realize that Joanne's had such cute panels.