I do it basically the same way as soccermom and sarahg.
I do use a stabilizer as well.
I have tried the coffee filters and some of the lightweight tearaway stabilizer but I had a hard time getting it all off.
I just started using the wash away stabilizer and I LOVE it.
JCaroline Creative has a nice tute on applique work too- if you need a visual
Fabric Applique Instructions
Have fun!
It is addicitve