mods to fit ernie:

cast on 56
do 20 rounds of k2, p2 rib
k 2 rounds plain stockinette
next round dec: k13, k2tog to end = 53 stitches
k2tog at beg of next round = 52
k20 rounds
switch to alternate color. switch to size 10 needles. dec: k10, k2tog = 48 st
k 15 rounds
switch to first color. switch back to 10.5 needles. dec: k8, k2tog = 44 st
k 12 rounds
dec: k6, k2tog = 39
k2tog at beg of next round = 38
k 10 rounds
dec: k4, k2tog = 32 st
k 4 rounds

Gusset:
Setup Round: K16, Place Marker, Increase 1, K1, Increase 1, Place Marker, Knit to end of round
Round 1: K around slipping all markers
Round 2: K around slipping all markers
Round 3: K to first marker, slip marker, increase 1, K to next marker, Increase 1, Slip Marker, K to end of round.

Repeat rounds 1-3 until you have 15 stitches between the markers – row 18 since the end of the ribbing.

Knit 4 rounds plain.
Work 8 rounds in K2, P2 ribbing
Bind off loosely using decrease bind off.

Pick up thumb stitches. K2, p2 f4 times around. Bind off loosely using decrease bind off.

12.6.11 - finished first arm. waiting to see if it fits with my mods. starting a matching beanie in the meantime.

final verdict: happiness at christmas. next time, though, i will cast on less if i use this yarn again because it was kinda loose…