I would make it into a T-shirt dress. Find a coordinating fabric to add length to the soon-to-be-dress. When sewn into a tube, it will need to be 1 1/2 to 2 times as wide as the existing T-shirt is at the hem. Put in your hem to the fabric, now gather the tube to fit the t-shirt and sew the top of the skirt to the bottom of the T-shirt.
Viola!
Except that it will be really loose. Try out those mitten thingies on it now.
Maybe that was as clear as mud.
Here is a tutorial. But don't cut anything off the t-shirt. It will be a drop waist dress like below...
