Yes, the pickguard material is inlaid into the headstock. I have done the same on a number of builds - check out the MBM-1 headstock at https://www.buildyourownguitar.com.a...l=1#post227426.
The decal is cut on a Cricut smart cutter, I have the Cricut Joy. Check out https://www.buildyourownguitar.com.a...ad.php?t=11728.