Thanks to everyone who helped me figure out the grafting - after knitting a test swatch and trying out several methods, I realised that if I aligned it at the right rows, it was just a KNIT row all the way across - so I just kitchenered as normal. Silly me for not realising that sooner!
I used Knitpick's Shine and I LOVE it. It is so soft, and knits up like a dream! I cannot wait to try the worsted version!
Anyway, I am very pleased with how it turned out. I apologise for doing this, but I'm having trouble with my photo hosting site at the moment so I have uploaded photos to my knitting blog, and if you would like to see them they are here: Abigail Knits.