Thank you so much for your reply. I really appreciate the help. That was exactly what I ended up doing. I made the font 1.5" and it seemed to work perfectly - though I had to go over it a second time to ensure full coverage (even with a water soluble topper).

Do you happen to have any advice on how to ensure that the name is straight on the towel? I thought I had it pretty well marked but it ended up being about a 1/16" off - it's hard to make sure the towel is parallel across the machine since you have to roll up the sides to fit. Are there any tricks? Thanks!