It turned out to be WAY easier than I thought. For this kind of redesign to work though, you'll need a T-shirt a couple sizes too big. This one was a child's size 8-10 and my daughter is wearing 5T right now. I started by finding a shirt about the size I wanted the finished one to be. (If you want more details about how I did the poodle applique you can check out this post.)
I folded them both in half down the middle and made sure that the tops of the shoulders matched up pretty well.