I am working on a design to put on a saddle pad (http://www.statelinetack.com/item/roma-miniquilt-dressage-saddle-pad-full/E004202/). Essentially, it's the word Magic in a Cresendo font with streamers using a steil stitch and stars, using Symbol font letter M for stars.

So what I'm trying to figure out is what recipe to use for this type item and if I need to make any additional adjustments to everything.

Also, what's the best way to remove the dot above the i so I can replace that with a star.

I've already done this once on a lavendar fleece cooler and it came out great, but I used tons of underlay (plus solvy topping) to make sure the nap stayed down and the embroidery stitches didn't sink in.

You can process the font (Control E- Process- Text to segments)  Then do a lasso select arount the dot and delete.

My personal opinion is I would use a zig zag underlay on the font . The stars probably do not need underlay added and the steil stitch use a perpendicular underlay just to lift it.  Seems that when I use zig zag on steil stitches it has a tendency to show.  Set Absolute Pull Comp at .01in.  I have done those saddle pads and they always turn out nice.