Have you guys ever heard of Threadbanger? Ok, I was probably the last person to hear about these crafty peeps, but just in case you don't know about them, they're fun, they're awesome, their web segments crack me up and they make things look so easy.
Here's an Applique and Iron-On Transfer episode I found super-helpful:
Now granted, I haven't actually tried it yet, (it's yet another one of my 5,000 projects to complete) but I did buy fusible web right away and it's waiting patiently in my closet. :)