Here is the result....
We used a bit of non sew bond-a-web to apply the letters, a good opportunity to find out how it holds up against day to day use. I made her, draw and cut them out. I left it unlined for quickness, sewed in the zip, and added a bit of the gingham to the end of the zip.
A few weeks in and the pencil case is holding up to daily use, however the bond-a-web is starting to peel up in places, so I might add a few stitches around the edges