You are right this starts at the bottom and works it to the armholes in one piece.
I'm having my doubts about whether this will be an easy pattern to change in the way you want. Yes, you have 133 stitches right at the armhole shaping but until then you have been working with 204. The pattern stitch I believe is making it somewhat smaller than that would seem to indicate. But another thing that gives me pause is the raglan shaping that is row dependent. By that I mean you need to work a certain number of rows to get it to work as written and with a gauge change your row gauge will be longer and I don't know how that will affect the length of the armhole. It might all work out fine, but who knows and and that is a lot of stitches to have to rip out when things go awry.
The raglan shaping is the slanted way the sleeve holes work. After you get to the armholes they have you put all but the stitches of one front on a holder and you just work the front shaping of that armhole and when you get to it the neck you shape it and keep the raglan sleeve shaping going as well. Then you work on the back and shape the slanted armhole on both sides of it. Then you do the other front. When you have all the parts done you then sew the sleeves together in four places.
This is a beautiful little set. Are you wanting to make other parts besides the sweater, or just that? I have a sweater pattern like it that is a favorite of mine that starts at the top so it has no seaming (maybe the sleeves in one place). It is made with fine yarn too and written in only one size a one year.
Here is a link to a free pattern online that you may be able to use as is (I think you could make your 21st=4 gauge do 23st=4, but you'll have to go down a needle size or two). It doesn't have the eyelet at the neck for ribbon, but maybe you could put one. You could make the sleeves plain and make them longer with a cuff. Yours had a self band and you could actually add one to this by adding 4 or 5 sts to each front and keeping them in garter throughout. Just some thoughts.