Sorry I didn't answer you before you posted (ie when you needed it) -- my ESP is in the shop for repair! LOL
Apply the sleeve like "normal" (I sew the raw edges into the binding). To sew down the fold, do it exactly like a blind hem on a dress, just catching your stitches through the batting, and not going all the way to the front. I've done this even with really thin batting and never had a problem (unless I'm sewing past my bedtime, which is a different story altogether.)
Since it's probably been as many years since you've done a blind hem by machine as it's been for me, I'll try to describe the process. Look for a stitch on your machine that looks like _ _ _ / \ _ _ _ / \ _ _ _ . On some machines (like mine -- grrrr) the horizontal lines are replaced by little mini-zigzag stitches. That's a stretch blind hem, and I don't like it. If you only have the stretch blind hem, you might find a plain zigzag is easier. No matter which of these stitches you choose, the process is the same. (And it can also be done with a straight stitch with some practice and a minor variation.)
Next you need to fold the quilt. With the back of the quilt facing up, fold the top under so only about 1/4" or so of the sleeve is peeking up above the fold. The first few times you do this technique, it may be easier if you pin the fold in place. Now you can *carefully* sew the sleeve in place -- the _ _ _ part of the stitch goes on the part of the sleeve that's sticking up, and the / \ part takes the *tiniest* bite into the fold of the quilt, being careful to catch only as much as you would if stitching by hand. If you're using the straight stitch, every stitch is just the tiniest bit into the fold. Still works great, and this is how I do mine because I really detest that stretch blind hem stitch. (Did I mention I hate that stitch? LOL)
The first couple of times you do this, it will be a bit slow because you won't be quite confident how far in you can go. Once you get a feel for it, the whole thing goes really fast.
HTH!