I've used June Taylor photo/fabric sheets in my HP printer, which I know is not water proof. I'm not sure if it faded/ran or not, since I didn't wash the quilt. It was just a "who made it" label, so I didn't think it mattered.
Fair warning to anyone who wants to use it, it's like sewing through starched canvas. You can hardly get your needle through it. I'll not use it again unless it's going to be machine sewn.
bkay