
The flat lace that forms the casing is actually attached so that it extends beyond the edge of the shirt fabric. You end up with a fairly narrow casing, just wide enough for the braided cord. The ends of the lace casing meet at the centre of the mitred trim, right at the neckline. You do have to deal with a funny jog in the neckline of the front - I had a look at my daughter's shirt and it does look like I just let the lace follow the edge, jog included:

This really isn't noticeable on the finished garment, though, as the neckline is gathered up with the cord.

Here's how it should look all put together:

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