The
stencil sheets are primarily intended to be used with
Overlay Paste, and I also like Kurt's suggestions #1 and #2.
Take a look at the items included with this
Art Clay Silver Overlay Paste Kit, to get a rough idea of what tools and materials to use with the stencils.
I'm not sure what the best way is to make words, but I do believe the included instructions say wether to wait until one letter is dry before making the next letter, or whether you can cut the stencil up. I think cutting the stencil would have some negative side effects (too many edges that might affect your design), but the waiting for a letter to dry before painting another requires a lot of patience.