If you do cut up the emergency flexible foil into squares you will lose the insulation factor of the foil blanket.Air would get in all along the seams.

I'm not sure you could even sew the foil without it tearing I'd try to keep the foil in 1 piece or use quilt batting.

Personally I'd try to get your house insulated or at least 1 room where I could be comfortable. You might pay attention to caulking. A tube of calking isn't very much and often they have them on sale. I'll bet in a house that old there are places around the windows and doors that are letting in cold air.

Well, first off, why would you need to cut the emergency blanket if you're just going to sandwich it between fleece and a sheet?

And yes, if you do quilting stitching - which is needed to keep the layers together - you will create holes to allow the cold air in.

Those emergency blankets are not washable, by the way, so you have money invested in a sheet and a piece of fleece, and you can't wash it.

A better bet would be to buy a medium to high loft polyester quilt batt, sandwich that with your sheet and fleece, and tie the sandwich at 5 or 6 inch intervals. That will create a lot of air space in the sandwich, which will keep the cold air out and your body warmth in.

A polyester quilt batt - even in a king size is only about $20.