Always something to learn from others on here. Lots of knowledgeable people.

I would make my blocks larger before I applique and then cut them down to the 5 1/4

Show us pictures in case we can think of other options.

have you read all the way through the instructions? maybe they start out at 4 1/4" to be trimmed after appliqueing- it is common to cut your squares 1/2"-1" larger than needed for applique- then trimming after to the required size- most of my purchased applique patterns have you cut your squares 1" larger than needed block size.

I agree with everyone about embroidering first, then cutting to size. But I also have found that if I use a stabilizer behind my fabric when embroidering, it doesn't shrink. Then I just either tear away the stabilizer or soak in water to "melt" it depending on what kind of stabilizer I've used.

Thanks so much for all the ideas. Once I get it finished I'll try to post a picture. It has been quite a project so far.

If you make the block larger to cut down later, mark where it is to be cut down to, so that your applique does not get too close to the sew line. I made my applique background bigger and forgot and ended up sewing some into seam allowance. I worked on the quilt for two years, easy to bring to work and sew on during break time, was in no hurry,

Does the pattern give you the finished size of the block after appliqueing? Seems to me that appliqueing will take up some of the cut block so perhaps the pattern has allowed for that and the finished block size is smaller than 5 1/4" cut size. I would square all blocks to the smallist size block instead of making smaller seams. Smaller seams may pull out and then you will really have a mess!

I agree with Gramie bj and Nammie to 7 cut blocks larger, applique and then trim. this way each block is cut to the perfect size.

When I applique sometimes I use an embroidery hoop or try not to pull too tight on the stitches. I have also used a basting spray to keep the applique in place. Every little stitch can result in a pucker that can pull the fabric to the middle. Works for me.