I've made a little progress on one of my other Christmas projects, this framed wreath. Directions are in Sew Scrappy, an American Patchwork & Quilting publication from last fall.
I'm making my version using a variety of shades of red and green wool. I bought most of it from Attic Heirlooms when they vended at a local quilt show.
Here are a few of pieces I've put together so far. When I have a few more done, I'll start putting them on the black background.
I've found wool applique to be not at all difficult (this project anyway), though it takes some practice to work up a rhythm and keep the stitches evenly sized and evenly spaced.
Cottons n Wool has a nice tutorial on methods for wool applique.