I use a regular straight stitch, smaller stitch length, and I use clear monofilament thread. I stitch as close to the edge as possible.

Depending on the item, if I am going to quilt around it, I'll try to quilt right over the monofilament stitching.

In the pic below you can see both the monofilament and my quilting stitches. This item is a wall hanging, and all of the fabrics are batik. It won't be washed much.

I want to add though ... the sample above was not with fusible, I used a simple glue stick to place the pieces. Since then I began working on another project using raw edge (again, all batiks) but this time using fusible. This new piece has places were there could be as many as four layers of fabric (and three layers of fusible) in a given area. When I tried to outline my pieces with a monofilament I ran into a new problem .. the fusible left holes in the fabric that will not close. Because the thread was invisible, the end result looked like a series of holes. After experimenting on a test piece with different needle sizes (even the smallest needle left holes) and different thread, the best result I had was to use a self colored thread as it masked the holes more than the monofilament would have.

The lesson I learned is that I won't use fusible anymore. The glue stick did the job as long as you didn't handle the piece too much before you stitched the edges down.

It depends if you're okay with fraying (some people prefer the frayed edge look). If you do it in a 50/60wt cotton in a matching color or a 100wt silk in a coordinating color, the thread will not show up much as a blanket stitch (I do my stitches a scant 1/8") and then you can wash it on a regular basis & it can be touched without worrying about fraying.

I know a quilter who does all her fused applique with a blind hem stitch (and have seen online tutorials on that) but it just always seems to start fraying by the end of the first year. All those little pockets where the straight stitching runs along end up peeling and fraying.

I think it all depends on the project and the look you're trying to achieve. Personally, I like the looks of a blanket stitch, I use a small setting for my stitch length...

Prefer tiny zigzag either with inv. thread or one that matches piece.

I use a blanket stitch on all my applique. You can vary the stitch width and length to suit you. I usually use smaller on smaller pieces and a bit larger on larger pieces, but always have the straight stitch right next to the applique, but on the background. If your thread color matches the applique you have to strain to see it. Only once did I use a satin stitch. It is much harder to get even curves but doable. This was on a bed sized quilt for a toddler and will be washed many times. I haven't quilted it yet, but will also stitch on the inside of the satin stitch to reinforce the pieces further. With satin stitch: http://www.quiltingboard.com/picture...n-t267156.html With blanket stitch: http://www.quiltingboard.com/picture...s-t268455.html If you look at the close-up pic, you can see my stitches in the lighter leaf, because I used a darker green thread. All the other appliques are blanket stitched too, but you can't see the stitches, especially from afar, because the thread matches. On folk art type appliques, I like to use black, which makes it look like it was done by hand. Your quilt, your choice. Good luck.

Zig zag stitch is what I have used with success

I used other stitches until I found the blanket stitch. Now that is all I used for Appliqué.
This is a very neat and clean look.

You can do a regular straight stitch just inside the applique which results in a slightly raggedy edge (but on purpose). Yes, you can use the blind hem stitch or any other decorative stitch that grabs to the side.
My favorite for raw edge is the blanket stitch and I adjust the width and length to suit the size of the design.

Thank you all so much for your input, especially the pictures! I will be testing out these options.