Yup, I tear it all off...

That is right after it's done, and I take it all off next.
I have yet to get any bubbles with the heat n bond lite...just follow the directions
BTW make sure you get the Heat N Bond LITE. It'll say right on it that it's ok for machine applique. Actually you could probably use a different one that's ok for machine applique, but this is the only thing I've ever used.