V - you can make your own photo transfer fabric....you'll need the specific chemical and just treat your fabric. It is extremely cost effective if you plan to use a lot of fabric. If you don't want to take that route, try just cutting out the shapes and appliqueing to the background fabric. I can see what you are trying to accomplish so hate to see you so frustrated that you set it aside and never go back to it. Dharma Trading might have the chemicals you need to make your own photo transfer fabric - I don't recall as have not been on that site in a while.
Another option instead of applique is to layer under another color and cut out the pieces. For example, have your background fabric the sea color and underneath place a piece of brown for the island(s). Just cut out the sea color to show the brown for the islands. This could tend to waste fabric but then you have the potential to build your scrap pile!
And if nothing else...have more chocolate and maybe switch to Godsmack and play it loud! :D