First, crochet a loose chain of about 10 or so more stitches than you need on your cast-on row. In the case of the Lil' Devil baby hat, chain about 80. On the back of the chain, you'll notice that there is a row of yarn "beads" where the chain links join. The trick is to pick up your cast on stitches (70 in all) in these beads. It's a good idea to make the chain with a contrasting yarn. When you're ready to work on the earflaps of the hat, just unravel the waste yarn, and you'll be left with a clean row of empty stitches to pick up and continue on.
If this is too complicated, just do your regular cast on, and then pick up the stitches for the earflaps normally. Just make sure they're spaced evenly.
One pattern adjustment: In the first part of the directions, I say to knit garter stitch for 1", and then switch to stockinette stitch for 3.5" inches. You might want to only go for 3" to make a total of 4" from the first row. Or even less. See how it goes, and start your reduction rows where you want the top of the hat to start.
Good Luck!!!
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