Ok, good. Yes do one full repeat (4 rows) of the gull lace after the garter stitch rows. (It should be at least 3 rows garter or enough so that the sleeve sts almost meet under your arms.)
Why not line up the sleeve markers with the increases? I don't think a stitch or two off will make a difference but, if there's not something else going on, I'd line up the sleeve markers with the increases.