I like the way it's worn, I just think it's too obviously pixelated. I tried to feather the selection, but when the objects are only a pixel wide, it doesn't really work. I think I'll do the text and border layer again and use the same grunge pattern, but I'll increase the size of the layer by maybe 125% before I do it. Then, when I shrink it to fit, the antialiasing should soften up the hard lines.
That's my theory anyway. We'll see how it goes.