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Create a halftone border in Photoshop.
Add a halftone drop shadow using Photoshop.
Tutorials
How'd They Do That? - Embroidered Type
In just a few minutes you can create this cool embroidered type effect. Simply follow the steps below. 
April/May 2005
Headline type effect on Big Brand Theory ad, V10N1.
1. Place your text in Illustrator, and give it outlines (Type > Create Outlines). Draw white lines with the pen tool over your copy. Tip: Draw one line, then hold Shift-Option and drag it over. Hit Command-D to repeat.

2. Go to File > Export and export your file to Photoshop format, as a flat image.
3. Open the document in Photoshop. Select the black areas with the magic wand tool (turn off Contiguous).
4. Once all your black is selected, hit Command-J to jump the layer. Delete your original layer.
5. Go to Layer > Layer Style > Bevel and Emboss. Use the settings shown to get a subtle effect. Click OK.

6. Now bring in your background. Determine your type color(s) in Illustrator before you begin—we used black to better show this effect.
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