After reading all of your lovely suggestions and talking with my Mom, who is quite a good seamstress, I finally fixed this dress.
I ended using the shirring idea, only instead of doing the whole neckline I added elastic just by the shoulder seams. It would have been best to do it under the bodice lining, but I had already completely finished the inside of the dress and it would have been difficult to re-do. So I zig-zagged the elastic over the lining.
I'm happy with the dress now and so glad that Princess H. can wear it. Thanks again for all of your help. It really did help get the ideas flowing as to what could be done and helped me to get over my complete paralyzed panic.
You all are the best!