I think all of your plans are spot-on. I like the idea of washing the fabric first (with the edges serged), especially since it came from a thrift store. If you plan on quilting densely then a wider seam allowance is probably not absolutely necessary, but if the quilting will be sparse or in the ditch then I think increasing it is a good idea. I have a throw quilt made with loose-weave decorator fabrics, and I am regretting not using a bigger seam allowance. Live and learn. This pattern lends itself nicely to changes in seam allowance, and it will look great with your homespun fabrics.