Since you're enjoying machine applique, I think a knee lift is invaluable along with the needle down and the blanket stitch.
While you're waiting for the perfect machine, you could try invisible applique with MonoPoly thread in the needle, thread that blends with your background in the bobbin and a blind hem stitch or a zigzag stitch. This has become my favorite way of doing machine applique. The presser foot lifter is a real pain, especially when you're doing small pieces.
(Sulky and YLI also make the invisible thread in clear and smoke colors, but they're shinier/more visible and I think they're made of nylon, which can melt under an iron and isn't as strong as poly thread - that's the reason I suggested "MonoPoly.")