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!  
That is seriously so cute. Love it.
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