And here's the result. I'm liking it. I used a novelty knit from Hancock's that I've had hibernating in my stash for probably two years. It has a really nice multicolored horizontal stripe, a little bit of shimmer, and a pointelle pattern knit into it. It has just enough horizontal stretch to make it suitable for this dress, and almost no lengthwise stretch. I think it's going to work great, because the first version of this dress had a lot of lengthwise stretch, and it tends to grow throughout the day.
The only problem is that this fabric is a tiny bit sheer, so I have to remember to wear a slip.
I pretty much made this version exactly the same as the last one, except I shortened the sleeves, and I had to cut the overlay on the crossgrain to take advantage of the stripes (and the stretch!) I love how the stripes seem to flow over the upper arm straight into the overlay. A happy accident, I assure you.
The princess likes it, too. And since I had a good 2+ yards left of this fabric, (what was I thinking buying so much?) I think I might look for a suitable pattern to make her a "matching" dress.
Now, back to the sewing room!