Thank you to all those who have left a comment or sent an email regarding this muslin. I took Gail's advice and widened the bicep. What an AMAZING difference this makes. Not only does it feel better, I have complete movement in the arm now. I split the sleeve cap to widen and lengthen it about 3/8 inch. I just pinned in a strip of muslin for this quick alteration.
This muslin still needs so much fitting that I am going to go ahead and put together Muslin 2. I've started the flat patterns adjustments already.
I am lengthening the armhole and sleeve cap by 1/2 inch. I have also made a 2 inch FBA, which is really simple on a princess seamed garment.
I still need to lower the bust point by another inch and will also lengthen between the bust and waist a further 2 inches. If that proves to be too much it will be easy to pin out in the new muslin. I'm still planning on widening the bicep.
I've been rummaging through the fabric box looking for the real fabric for this shirt. So far the only suitable things I've unearthed are heavily patterned. In order for all the neat seaming and style lines of this pattern to show off I think it needs to be a solid colored fabric. Most of what I have is for more of a bottom weight, so I'm going fabric shopping!