osewme,
Sorry no one has been able to help you. Having not made such a quilt, I was looking forward to learning from others. But what you are doing sounds to me like it will work. Not all fabric fray well, and I don't think you mentioned what your appliqués were made of. If they're of either flannel or homespun, fraying should be great the way you propose. When I make a standard rag quilt, I use 1/2" seams and then cut the fabric almost to the seam. Gives a nice fray when washed.
If I were you, I'd wash the quilt before giving it to the mom, regardless of what appliqué technique you use. (Gets rid of any oils, dirt, germs, etc., before baby uses it.)