I've seen it done different ways. I think you need to decide how important the applique is to the quilt then quilt it in such a way as to support that decision. To do overall quilting on top of an applique makes that applique blend more into the background. To leave the applique unquilted while everything around it is quilted brings attention and importance to the applique. If you want quilting on top of the applique but still want it to stand out, you can try doing the overall pattern around it then quilting the applique separately and in a pattern that makes it more prominent. AGain - how important do you want the applique to be on the finished quilt?