Applying DMT Dash Overlays

The wood grain on my 74 Dart Sport dash is flaking in spots. It doesn't rub off any farther with my fingers.

I have Detroit Muscle Technologies wood grain replacement overlays. I didn't want to install them over the area that's flaking until I found out: A) If it would continue to flake after I install the overlays, and B) can I remove the entire original wood grain, or sand the edges and not have them show through the new wood grain decal.
Or, bottom line, what do I need to do before I put the new wood grain on?

I emailed DMT, figuring they would have a technique. Jim Fillmore replied saying, essentially, that it something I'll have to figure out.

I thought I'd check here to get ideas.

Peeling Woodgrain 1.jpg

Peeling Woodgrain 2.jpg