How about this--basically the same idea as your's without as much sewing. Pick up and knit along the edge, Purl a turn row on the right side for a turning row, or even a picot edge might look nice. Then knit a hem to sew to the inside. Sew the live stitches to the back, just skimming the inside of the sweater to avoid a strong line. I think that will stop the curling. It does on sweater bottoms. If you're going to add something, might as well be knitted on.
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IngridKH on Ravelry