I agree with sewcrafty, if you can get it back in shape first, you may like the looks better in the end. Quilting around the balloons and other objects would help keep the layers together. I would prewash the muslin it hot water first :wink:
What if when you sandwich it, you cut the muslin just big enough to fit just outside of where you have your stitching lines. Resew them to catch the edges of the muslin, and trim any excess muslin away. Leave 3-4" of fleece on the front and back around the edges, clip them for fringe or tye them instead of a binding?