With electric knife:
http://www.youtube.com/watch?v=jkNT3...mbedded#at=146

I do this, but if you are making a quilt motif, you need to remember to leave bridges like you see on a commercial stencil. I want to know what kind of mylar she is using. It looks like it doesn't leave glops that have to be removed to make it lay flat on the quilt like the plastic I have used. Hmmm.