Thanks for the responses! That makes sense, that the collars and cuffs were removable. Flour sack fabric was used for clothing so perhaps the family had plenty of the same design. I found an ebay sale once that had real flour sack fabric of an identical design to Kit's yellow dress with little roses. Alas I lost the bid. It would be nice to think Pleasant Company pictured Kit's blue dress fabric in a genuine flour sack design.
After considering all the options, I'm going to do the short sleeve dress. Since the fabric is cotton, I think plain long sleeves might be more of a challenge to dress the doll. I think the doll arms would have to bend too far back to get into the sleeves since the top is sewn shut where it attaches to the skirt.
Making a removable collar and cuffs sounds like a great idea! I had completely forgotten about that. I have a Dover book about fashions in the 30's and there is mention of removable collars and cuffs too. I'll have to see if children wore removable collars.
Julia