I do know that several years ago in December I was at the Botanical Gardens in Cleveland and each of the area Garden Clubs had decorated a Christmas tree based on a children's book.  You might call them and see if they dealt with any copyright issues.  

Also, one can always ask the publisher/author/illustrator for permission to do this.  They have sole right to copy, but they can give permission.  They might consider it free advertising.  Will you be selling books at the quilt show?  

Of course, if you only used books in the public domain, you'd be fine.  I once worked with a woman who had taken a coloring book of Peter Rabbit and had traced the pictures onto material and was embroidering each of the pictures on our breaks/lunch, preparatory to turning it into a quilt.  I believe Peter Rabbit would be legal.  

And if you really do this, please let me know.  I'll come.