I found a jar applique at Applique Alley and got to work.
I went all over town trying to find some cheap toy bugs that were A) cute and B) flat enough to lay well under the vinyl. I ended up finding some at Fred's (I think, but I went so many places I really don't remember). Then I went to Wal-Mart (who did NOT have bugs) and bought some medium weight vinyl from their really fabulous new fabric department.
It stitched really well, and I was super excited with the results!
Until...Gabriel put it on and I realized that the vinyl had come apart from the stitching :( The bugs are kind of rubbery though, so there was enough friction against the vinyl to where they wouldn't fall out. After all the work I put into it, I decided he was going to wear it at least once, even if it came apart on him, haha! So he wore it on another trip to Wal-Mart (we go there a lot even though I am not a huge fan) and a lady actually stopped me to ask about his shirt. I washed it and stuck the bugs back in, and it still seems to be wearable. The vinyl lays flat against the shirt, so it isn't noticeable unless you are really looking. I may try it again and see if I can attach the vinyl a little differently.