The letters would be glued to the backer. To place them correctly, keep the waste area you cut out and lay it on the backer once rest of pic is glued. Then just place the letter pieces right back where they were cut from (with glue on the backs of them of course). Use this method for any of my patterns that have floaters...when I have floaters, it is intentional for realism. I included a second one where the letters don't have separations in them. Forgive the slight jaggedness in them. Enjoy the simple pattern:
