I’m so sorry this happened to your quilt, Julia. You worked so hard on it and were very excited to have it done a month ahead of time. I’d be in tears and angry about the poor quality.
I think you’re wise to have started over. Poor quality covered up is still poor and might rip worse with time and washing. Besides, putting appliqués all over it might not be comfortable.
You’ll be fine. Deep breaths. Practice the ole Lamaze breathing —heeheehhoohoo, heeheehoohoo.