Open the image you want to turn into a stencil in Gimp. Using the magic wand, paint tool, intelligent scissors, etc. get rid of unwanted background. To remove a selected area, press Ctrl-K. To invert the selection, press Ctrl-I.
Adjust the threshold of the image. If you cannot get the entire image looking good in one step, use the lasso tool to do it in different steps.
In this particular image, the head and body are done in different steps. (Note: To add to selections using the lasso tool, hold down the shift key. To remove from selections, hold the control key.) It’s okay to re-select already adjusted areas. Save the image.
Open Delineate. Make sure the “potrace” tab is selected in the top of the options box. Click the “input file” button and select the black-and-white image. Copy the path from the “input file” box to the “output” area, adding .svg to the end of the file name. Click “Run”. You can change the “turdsize” settings to remove small details to your preference. A higher value removes more small detail.
Open the .svg file in Gimp. A dialog should offer to resize the image for you; you can increase the size as much as you like at this point without making the image grainy. Add a white background to the image. In the “Layers” dialog in Gimp, create a new layer by clicking the button in the bottom left corner. Select “White” as the Layer Fill Type. Drag the “New Layer” layer beneath the “Rendered SVG” layer in the dialog. If you don’t see a “Layers” or “Layers, Channels, Paths” dialog, click on the main window of the Gimp (the toolbar) and open File–Dialogs–Layers.
Use the eraser tool to remove any extra detail or to create bridges. Make sure the “Rendered SVG” layer is selected in the “Layers” dialog before erasing. Save the image by File–Save As… Be sure to change the extension of the file from .svg to something else (png, jpg, gif, etc.). If a warning dialog comes up, click “Export” or “OK” to save the file.
And you’re done!