Fixing A Felting Nightmare

One of the requests I have to knit for Christmas is a "large, felted tote bag made out of Noro" – OK.  I knit up a decent one and felted it.  I have never felted with Noro before and in my Pre-Xmas haste, I did not felt a swatch.  When Noro Big Kureyon felts, it loses over half of its size in height but less than 1/4 of its size in width.  Yikes.  I am now left with a bag that looks like this:

Bag_before

But here’s what I’m thinking to fix it.  What if I knit a tube slightly smaller than the walls of the bag and sew it inside the original short bag walls, making a taller bag.  I could turn the outside (short) bag walls into big, crafty pockets like this:

Bag_repair_1

Will it work?  Any thoughts?

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