I think the amount of raveling would depend on the angle the fabric was cut. If you are using circles and the fabric is cut on the bias it may not ravel as much as those on the straight of grain. I have never made an applique rag quilt but it sounds challenging and I would love to see a picture of the finished item. When I do make a rag quilt I clip the fabric and then I wash & dry it at least 3 times to get it nice & fluffy.