If you use a good fusible, make sure you iron it down well, and make sure the blanket stitch is not set too wide (I use a 2.00 length and 2.0 width, double blanket sstitch on my Bernina) it shouldn't fray, but I admit, I don't wash my quilts. You could also use a batik fabric for the appliques, as it is tighter woven. I might also suggest making a small sample and washing it to see how it works.
