Peckish brings up some good points -- the seam allowance is an issue. My solution would be to sew on at the standard 1/4", and then go around and make sure that there is no slippage and it is on well, and then I would trim it just a scant bit or maybe use pinking shears would be good, and yes, you'd be pretty much on line or a thread or two over.
Depending on the quilt, I might make sure it is full and round more like cording instead of flat.
But like I said before, I've had to hide a 1" strip of fabric inside a binding before and made up for other short comings many times. It will be ok in the end! But please let us know your decision
