How about printing your label on printer paper then going to something like a light box and tracing it using a pigma pen - they come in colors too.

The only way I've learned of doing this is to use an injet printer, not a laser printer. If you use the freezer paper method, after you iron the fabric onto the paper, trim the edges so that they are perfectly square. I also cut a 1/4" strip of freezer paper and iron it to the top of the other side. This will keep it from curling in the printer and jamming up.