I've found by paying attention to how my embroidery machine moves to make satin stitches around appliques, I can try to do that by hand for my own lettering. I've gotten much better, but doubt I'll ever get the super neat look the machine does on it's own. Maybe some day I'll figure out how to scan and combine my own applique and have the machine stich it out. I'm pretty sure my machine has the capability to do it - I'm the one lacking knowledge.
I have the Babylock Destiny upgraded to the DII. I have a 9.5x9.5 hoop along with the 8x11. The square one is really nice for quilt blocks.
I've been doing turned edge appliqué and attaching it with a narrow zigzag with invisible thread. That turns out quite nice too.