This is the gauge swatch that I made before I started. I did one repeat on #3 needles and a second one on 3.5mm. I decided the second one is closer to the gauge, so that's what I plan to use.
I did the border pattern again, after ripping it out once. It turned out much better the second time. In fact I am happy with how it looks. I have a picture, but it's still in the camera. Now I am afraid to measure it, because I think it is too small, which means I'll have to rip it out and do it again. Aaargh! For some reason this pattern calls for doing the border on 2.5 needles with 265 stitches and then increasing to 273 stitches and 3 or 3.5 needles for the body, which is the all-over design in the gauge swatch here. I can't figure out why they wanted me to do the border on smaller needles. The number of stitches I understand. That is because the repeat is different and that is to make it come out symmetrical at the center front. But it doesn't seem like the bottom hem should be smaller than the rest of the jacket. They do call it a jacket (jakke).
So I'm going to go up to my yarn store to see friends who knit there on Tuesdays and ask their opinion.