The length of the elastic is up to you — basically, just make the final length of elastic shorter than the circumference of your sleeve so it will crunch up and give the sleeve a ruffled effect. Although I don't believe I measured it for this tutorial, my "rule of thumb" is to place the elastic around my bare arm where the finished sleeve will fall, tighten it by 0.5 inches, and then mark that tightened final length on the elastic.
If you'd like a safer approach, you can always use long basting stitches to try elastic different lengths before sealing up the sleeve in step 8.
Let me know how it goes — I'm so glad you're liking it so far! :)
How much elastic do you use? Do you measure the elastic around the arm or just thread it through and once it is all the way around cut it?
I am loving this and I hope you respond quickly because I am right in the middle of it!