Micheal's doesn't always carry useful stuff for pros IMHO, I'll go there when I'm desperate, and usually I am disappointed because they don't have what I need. YMMV, but I don't think they'll have tylose (but look for gum tragacanth, it'll do the same thing). Make the powdered gum paste a day before you want to use it, if you go with that product. For this, personally I think you can get away with fondant. But if you happen to find modeling chocolate, that will work too. Or you could make modeling chocolate.....
Other random thoughts: you may find the marshmallow fondant to be stretchy, and it might fight you when you are trying to roll it out and then form the ruffles. It's just going to take a little getting used to, it's not good or bad. The various cake forums (at least on FB) have wonderful things to say about Liz Marek's marshmallow fondant recipe (you can google it); and the recipe works best with specific types of (cheaper brands) marshmallows. People rave about the workability of it, so if I were going to make some, I'd start with that recipe.
For the ruffles themselves, I would make a long strip, maybe about 3 inches wide at least, then start folding it like the shirt ruffles. Alternatively, you can cut circles out of the fondant, and then fold them and just layer them so it looks like the shirt.
ETA: I forgot to mention that rolling it thinly will help make the edges of the ruffle thin and airy; you just have to work quickly so the fondant doesn't dry out. It's when it's dry that it looks cracked and awful. Don't use too much cornstarch when rolling (confectioners sugar is very drying when you're rolling out fondant.), that will contribute to a terrible look if you roll it a lot. If that happens, spray some pan release on your hands and knead it
