Raw edge applique is just what you thought, You can zig-zag or use decorative stitches around the edges. I use med. weight Heat n Bond to adhere to background fabric, than stitch around the edges, and then usually do free motion quilting to define the details around the legs, eyes, whatever. Give it a try on a table runner or something, I think you will really enjoy it, especially if you are one for instant gratification such as I am.