Terre, the applique should work just fine - just slipping another piece of felt under the design before it sews out the finished outline. I am doing hair clippies also but, am having trouble finding small applique designs that will fit. Laura

I made a few hair clipies similar to the ones you brought at gg Designs. All the ones I made I used applique designs I already had I left of the satin stitch to make them quick and the applique design also has the placement stitch and the tack down stitch I deleted the one that is not a straight stitch hope this makes sence.
YOu could just stitch the whole design as is and cut around the outside. If you want a red hat and white face probably best to leave it as it is.
Have fun with your santa I will watch project to see what you did.

This is a link to one of the embroidery library projects - I think it would work well for the clippies, they stitch on organza then melt the last edges away.

The designs on sucker covers might be the right size for your project.

Fond a santa face applique and filled stitch at Agua Santa blog 313 there are 3 files. A small stitched, medium applique which you maybe able to shrink and a large stitch designs. I don't have a link to here site.

Another santa face free at sew swell you will need to shrink.