I am just doing a quilt which uses this method. This is going to be a large lap quilt but it will only have about 1/2 of it done this way.I was unable to source the fusible grid locally so just used a pencil and drew my own grid on some lightweight fusible. My squares are 11/2 inch and will finish at 1inch once completed.
I have not yet finished but so far so good. I have so far sewed all the horizontal seams and pressed the seams open. I was worried that when sewing the vertical seams that the horizontal seams would get caught in the feed dogs and therefore create more bulk that I starched the seams and then pressed again and i had no issues.
I only had 2 squares where the seams when sewing the initial horizontal seams did not get sewn in so I just picked out those stitches and resewed.
I have one more seam to sew and then do the final clipping of the seams and press open. I think I will again starch those seams as well.
I have not found the seams bulky to sew so far. The only hints i would give is to use a 1/4 inch foot and not sew too fast. Also when clipping i would not cut the seams less than 1/4 inch as i cut them too thin on some spots and then i found that it was harder to press them open. Yours might be a bit tricky seeing as you are doing smaller squares.
I found the most tedious and time consuming part was pressing the seams open but once that was done it was certainly rewarding to see the results.
I did wash most of my fabrics but I was naughty and did not wash them all as I was short a few colours and once i bought them i was eager to start! So hopefully it will go ok when washed, fingers crossed for that.
I used the tutorial on Super Mario Bros quilt along dated July 12, 2012. Here is the link
http://cuttopieces.blogspot.com/ - sorry just realised I don't know how to do a link. I am doing the Mario block and as i only used fusible that had the glue on one side I was able to iron from the back and will be able to leave it in and not wash it out like she did. If you google pixel quilts you should find more information. Good luck with yours and let us know how you go.