Step 1: In advance: Make fondant stars. Roll out fondant 1/8 in. thick. Cut stars using largest Cut-Out. Let dry overnight on cornstarch-dusted board. Attach Lollipop Stick to back using melted candy, leaving 1 1/2 in. extended. Chill until firm. Brush front with damp brush; sprinkle on Sparkling Sugar. Let dry.
Step 2: Bake and cool 1-layer cake, 1 1/2 in. high, using firm-textured batter such as pound cake. Cut rounds with knife using largest Cut-Out as a guide. Ice lightly.
Step 3: Tint fondant: 3 oz. each blue, red; reserve 6 oz. white. Roll out 1/8 in. thick as needed. For top, cut blue round using largest Cut-Out; attach using damp brush. For side, cut a white 1 1/2 x 8 in. strip; attach. For stripes, cut three 1/4 x 8 in. red strips; attach, about 1/4 in. apart. Insert stars.