Woohoo! Excellent progress! Cotton isn't ideal for arm warmers because of the stiffness. The yarn you're working with now sounds much cosier. I don't know whereabouts in the world you are, but if your weather is anything like mine, you might well find your arm warmers going missing as someone else decides to try them on.
Have fun with the applique and your other project!
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Have fun with the applique and your other project!