The edges aren't fragile -- it's best to use bigger stitches though so that the vinyl doesn't get too damaged.
As for the water proofing, um, you could try to melt the edges closed somehow after you've sewn it together, but I'm not sure how well it would work (especially since the paper may well get damaged). The whole thing should be pretty splash-proof anyway.
Sorry, that wasn't very clear about the inside pockets...
Here's a messy picture to try to describe it better (sorry if it's even more confusing!).
If your machine won't sew through three layers, you might have to sew all the way around the illustrations on the machine then sew the inner in by hand.
Hope this helps.