I do the same as Angie, run my machine a little slower on 900, for larger areas I use Filmoplast. For leather, of course, a leather needle .....
I had wondered the same, so I tried it out on a small project. Daughter in law likes owls. I used one sheet of tear away and a 75/11 needle. 40 weight embroidery thread with a prewound bobbin. I always run my machine at 600 sts. I am not in hurry and the fastest speed scares me. This is the result. Stitched out flawless. Backed i with felt. If I do it again I think I will use vinyl on the back as well.
I use a 75/11 needle for all embroidery. Leather embroiders well and it’s fun. Sometimes I slow the machine down.
I use a 75/11 needle and my usual embroidery thread when I stitch on vinyl. I haven't had much experience stitching on real leather - but I think there is a leather embroidery needle. One thing about vinyl - if your design is dense - be sure to use an extra layer of stabilizer and maybe a water soluble stabilizer on top. Good luck!