Start by having a close look at the sequence of ridges and valleys in the knitted fabric. As you work the I-cord edging, you will be picking up one stitch in each garter ridge and two stitches in each valley, like this,
Next, cast on 3 stitches provisionally. I'm using a provisional cast-on because down the road I'm going to want to join the beginning and end of the I-cord together for a seamless border. Here, I'm using the crochet chain method. First, I make a chain of more stitches than I need.
Then I knit up 3 stitches into the little bumps at the back of the chain using a dpn.
Now I arrange things so that the working yarn is coming from the LH end of the dpn. With the WRONG SIDE facing, pick up (don't knit) a stitch in the garter ridge to the left of the centre back seam. There are now 4 stitches on the dpn.
See the working yarn coming from the back of the second stitch from the left? That's exactly where you want it to be!
Row 1: K2, k2togtbl. Snug things up as much as possible. At this point the I-cord cast-on is "married" to the garment, albeit somewhat tenuously.
Complete Row 1 by using the LH end of the dpn to pick up two stitches from the next valley (remember, you're doing this from the wrong side, so don't be afraid to flip your work over to check that you're picking up in the right spots). Slide all 5 stitches to the opposite end of the needle.
Row 3: K2, k2togtbl. Use LH end of needle to pick up 2 sts in next 2 ridges. Slide all 5 stitches to the opposite end of the needle.
Row 4: K2, k2togtbl. Sl all sts on RH needle to LH needle. 4 stitches remaining.
Repeat from Row 1.
Before long, you will see a band of I-cord developing along the top of your work. Seen from the wrong side (in this case, the working side), it looks like this,
Now for the collar. You will be working into the outer half of the little "braid" that forms the bound-off edge. You will also be working some unattached rows of I-cord. To do those, simply *k3, sl all sts to opp end of needle, rep from * the specified number of times. The scallops are formed by working a few unattached rows, then skipping some bound-off stitches before re-attaching the I-cord. So simple, and so pretty (at least I think so!)
but it will be GOOD ENOUGH!