I wash and dry almost all of my fabric as soon as I bring it home, but not for the fat quarters and small pieces I buy for making TM patches.
I put a thin layer of batting in between my layers, but I've used foam before. I think putting something in there gives it more texture, but you can do whatever you want- that's the great thing about making these!
I had forgotten that yesterday was the day we got partners, so I was pleasantly surprised when I got my PM informing me of mine. I was very happy after I looked at my partners' lists of themes, though- there are some very good ones to work with and I already have ideas for two of the patches!!!!