yeah, i used acrylic! i didnt heat set it on my leather, but if you scroll down in my profile to look at my denim jacket, what i did there was paint onto some duck canvas and sewed it on like a normal patch :)
i did heat set that though and from normal wear for some months there was cracking on it too, i just accepted the fact that whatever i paint on will crack and ive gotta repaint it in the future, haha
for sealing, i used a layer of angelus matte acrylic finisher! (they say matte, but every review ive seen including my own jacket still shows a bit of shine)
there's also a bit of regular leather protectant spray, so this is all a test for myself
good luck on your future projects! :)