Makes sense to me. Do you add the Santa, Christmas tree also? Can't determine what the other figure is in the back.
What wood to use? I know Steve suggests Baltic Birch ply and I will start with this. I find that ply doesn't seem to have the cleanest cut as compared to using a hardwood, less sanding in the small tiny areas when using a hardwood.
Two years ago when I used Steve's Christmas ornaments, I used Walnut 1/4" but found that often the Walnut would really darken too much after finish was applied. This time I am going to look for a lighter hardwood and a cheaper one.