I'm not fully prepared with pictures and tutorial yet, but I have to share this in case someone is looking for the solution.
I know how to do those invisible, mitered, mitred, no seam showing, seam encased, self-binding, whatever ya call it corner.
Have you ever seen those baby blankets at Babies 'r Us with the satin trim around the super soft plush cuddly stuff?
ZOOM in on the corner
*THAT* corner!
There are no seams, it's perfectly encased and no 'lip' of fabric for a faux-mitered edge.
like this corner at the bottom.
Here's how they do it.
First, they attach binding at each side of the blanket, like this tutorial.
http://www.sew4home.com/tips-resources/sewing-tips-tricks/how-make-border-mitered-corners
Then they use this neat little trick for an invisible mitered edge on the other side:
http://www.nancysnotions.com/product/no-math+miter+template+set.do#