I'm with 'luvTooQuilt'. I was also thinking of an I Spy quilt because it would make the letters easier to find. You'll come up with something and can't wait to see the final quilt. Have fun. :o)

Hmmm....I'm wondering if you could cut them apart and applique them to random colored blocks. If it were mine, I'd try that...it would be a first time applique for me, but that looks pretty easy. Wouldn't even have to be appliqued "square". I really like this idea...where did you find the panel??

I like this idea. Would make it less"busy" and give the eye a place to rest. Whether you add wadding or not depends on how thick you want it to be. Nice panel BTW.

You could cut apart the letters attach them to steam a seam 2 and apply them to another piece of material(Machine applique) with like A for apple and attatch an apple picture or some thing with the A letter and so on thru the alphabet.
Or go by row of letters and then under that row for learning possibilites add a row of pictured items that would begin with the letters above for a matching game.
Many different ways to make it educational too.

IF you were to separate the letters into individual letters maybe you could put the child's name in the center? Just a random idea!

If this will help , I love the quilt, but if your not happy with it , then maybe you can make an OBW out of it ..just a thought..

Another idea: cut it into "big" blocks that have several letters per block. You could alternate the letter blocks with another fabric, perhaps one with pictures (toys, animals, outdoors ... whatever is of interest to the child)

No way would I go to the trouble of cutting that up. I'd use another design--maybe a row of pinwheels or checkerboards?--to make that panel bigger, border it and call it good. If you put another design with it, you might want to divide it to put the extra row between the letters but the 3 yr. old won't care what you do. He'll just love that you did it for him.

Since you have 24", you could cut that into 12" blocks and use alternating blocks as previously suggested. Any left-overs could be used as cornerstones in the quilt border or the border on a matching pillowcase.

I agree with Jan. Little kids like to "search".

Why waste the fabric between the letters by cutting it up? If it's for a 3 yo, just put an inner border (black, 1" fin.) and outer border (Choose a color, 3" fin.) and call it a day. For the backing I'd use fleece and no batting. Fleece washes well and quilts well, and is practical for a child. Good luck!