Several years ago, with some inspiration from my favorite Nativity (left), a friend and I decided to make something similar using our families as the subjects.
For ours, I drew each of us as stick figures on paper and then, when I had it just how I wanted it, I traced it with a sharpie. Then I used my light box - a window would also work - to transfer the design onto muslin with a blue quilting pen (water soluble). I stitched everything in black embroidery floss, soaked out the blue lines, and then painted it with a stencil brush. Jeff made the frame. I love how it turned out. It's one of my favorite decorating items!