I use steam a seam 2 a lot.
what I usually do is stitch the applique on before I make my quilt sandwich. Then you have a couple options. You can use invisible thread to do your stitch in the ditch or (preferred)go right around the applique when you come to it.
if you are waiting to put the applique on until the quilt sandwich is basted i would do the stay stitching. Then I would stitch the applique on. I would probably FMQ the applique on instead of blanket stitch, depending on what my blanket stitch looks like for three layers. I would match top and bottom thread or use invisible (monopoly) thread in the bobbin only. Invisible thread doesn’t work when you use it in both.
Your quilt your way!