Most use a special sewing machine, that would cost around $900-$2000, so if you wanna dish out that much just to do a custom then by all means do you, but if you are a serious customizers it's an good investment to get. As for others yes they claim to do it by hand I'm not sure how true this is or not so I can talk about it any further.
Also there is the Illusion that it's stiched on, you make a template of the area you want to put fabric on and cut of the same exact size of that area and cut the fabric into that shape. Then get a sewing machine any regular 79.99 one at wal mart or something should do,(depending on the thickness of your fabric) and just sew around the edges and glue it back onto the shoe and bam if you did a clean enough Job it looks like you stiched it on by hand.
I could go into major detail with #2 but I think this is something you need to lear on your own. Not to be mean but its pretty fun(nerd customizer) to take the shoe apart and figure out how its done, I have taken apart well ove 10 pairs of serious beaters to figure things out.
As for putting the shoe back together use a sewing machine like I said will cost from $900-$2000.
No problems, some acrylics cant be used, so give me an brand that you want to use and I'll tell you what you need to do.
anita's permanent acrylics??
www.createforless.com/products/productDetail.asp?ProductID=8364
