I would definitely recommend Pearl's DVD for learning the process of freezer paper applique - however - she does not show any machine stitching in the DVD, just hand applique.
After a long time of practicing and reading up on various methods of stitching, I finally learned that the best way to accomplish "invisible" machine applique is to experiment with the stitches on your machine, and with the threads you have. Here are two blog postings that can be helpful on choosing the stitch settings for your machine: BlackBird Designs and BunnyHill Designs. On my Viking D1, I use a blanket stitch that has a couple of forward stitches, followed by one stitch bite going into the fabric. The width is set at .5 and the length at 1.0. This does take practice, and it does seem at first that the needle isn't even going into the fabric because of the very narrow width. Just practice on your machine and find what's right for you! Don't forget too, that through the quilting process your applique pieces will likely get "sunk" into the batting and back, so the stitches will likely become even less visisble.
