I bought a set of letter stencils at the hardware store that are used for sign painting. I use them to trace the letter I want on fabric fused to an fusible adhesive, then use my little 4" very sharp scissors to cut and fuse.
I can get a 2.5" letter from my Silhouette cutting machine easily for that size too. You might check around and see if you know anyone with an Accuquilt machine that has the letter/numbers die--think they are 3".