After putting this away for a few days, as recommended by quite a lot of lovely commenters (is that a word?). This afternoon with some trepidation, I pulled it out again. I re-read the instructions provided by The Victoria Sampler, realized that half of it made no sense to me, put them to one side and had a think about how I could get the look but doing it my way. I cut a couple of extra bits of batting and added this to Annette's, pulled the whole lot down around the mount board and pinned it through the cupcake case. Then using DMC 666, I stitched it into the case and I personally think it looks ok - well better than ok actually. Now it is FINALLY hanging from our tree.
Once again, HUGE thanks must go to Annette for gifting me all the bits and bobs to stitch this and for especially dyeing the fabric for me. You are an angel :)