Adapting a pattern to my gauge + size

I’ve decided to try “Peter” from Berroco, and have selected a yarn and gauge slightly smaller than theirs. They call for 20 stitches to 4" and my yarn knits at 22st/4". Therefore my gauge is 1.1 times theirs, and accordingly my stitches are .9090909 times the size of theirs. Thus if I knit the Medium (44" chest) pattern it will come out as Small (40" chest). At least it seems that way on paper… does this work in reality?

Next question: how do I measure my chest? Just tightly under the arms and around the widest point of my torso? Should I add an inch or two so the garment won’t be skin-tight? What if I plan to wear the vest over shirts, as in the Berroco model photo?