I always use an iron-on when doing stretch

Stretch knit :porous knit cut-a-way. See page 63 of the Q&A for a comprehensive list. ;)

Cutaway. The more stretch in the fabric, the more work is required of the stabilizer. That's a general guideline, of course. It also depends upon the design (and its density), as well as the intended use of the garment or project. For example, a knit sweater has regular ease (usually), but a swimsuit or ice skater's outfit has negative ease.

I think the best would be a 3 oz cutaway.

I would use cut away stabilizer. And if you don't use the kind that is fusible, then I would also use water soluble stabilizer (kind that looks like saran wrap) as a topper to prevent the foot from dragging across the fabric and stretching it.

When I embroider knit or pique knit polo or golf shirts I use a fairly heavy cutaway. It may feel stiff at first but it will soften after washing and hold the most intricate designs flat wash after wash. If you use tear aways the lettering in designs tends to pucker as will the edges of designs with 'looser' details. Here is a link to a site with many helpful hints including one on this subject!!
http://www.emblibrary.com/EL/elprojects/holder.aspx?page=Kennyskorner