Am a newbie at quilting & applique; just asked a pro at LQS the same question. Kathy said you can use freezer paper, a little larger than fabric to draw design. Fold fabric over edge of f-paper to create a small seam; press fabric to f-paper to create a tiny hem. When fabric cools, gently remove paper & place fabric on background, pin & stitch applique.
Hopefully Krafty-Bear or another experienced quilter can explain this or do a tute, but that's the general idea ;)
Just found this; hope it helps:
http://www.quiltingboard.com/t-93415-1.htm