you can indeed knit the sleeves in the round. I would omit one stitch on each end, since these would serve as selvedge when knit flat. So you would cast on 26 (not 28 ) and work k3, *p2, k7* twice, p2, k3. Place marker, join and continue in this pattern for a total of 14 rows.
Switch to larger needles, then begin increases.
You are increasing from 26 to 46 stitches (48 minus 2 selvedge removed) so you need to increase a total of 20 stitches. You do htis by increasing 2 stitches (one on each side of the marker) every 6th row 7 times, then every 7th row, 3 times.
As far as keeping the pattern, the author is not clear about this in the directions. I think you could keep it all in knit and then the ribbed part of the sleeve would be outside part of the arm, and the 'all knit' part would be on the underarm. Or if you could incorporate 2 purls after 7 knits to keep to the pattern.
Hope this helps. Good luck!