I think you are correct the waist line is not horizontal. I would expect the bottom of the waist tape to be at the top of the hip gores. Certainly later corset drafts specified diagonal waist lines, so this would not surprise me.
The first diagram from the patent shows the corset curving under the belly and over the bust, and with diagonal boning over the shoulder. This suggests a quite long line corset, like you believe.
I love your seam allowance observation:-)
I look forward to seeing how it comes out with a full length busk and back bones.
bestinterests: I'd toyed with the idea of including a pattern scaling tutorial into this article, but I didn't want to make it too long and technical, either. Still, written instructions can only convey so much! If it's okay with our lovely editors, I'll comment here soon with a link to an additional resource.
d_gold: Although 1878 seems early for a diagonal waist, perhaps Fanning was ahead of his time? His company's later Edwardian corsets definitely exhibit this feature. (For anyone who hasn't read it yet, http://www.foundationsrevealed.com/extras/casestudies/91-the-royal-worcester-corset-company has some excellent links and visual examples.)
tilialinden: Accounting for the fitting aids' extra width was something I forgot to address in the main article, so I'm very glad that you asked!
Before basting the fitting aids onto my toiles: - I folded over the fabric along both edges of the busk opening by 1/2" for Toile #1. For Toile #2, after I added the extra half-inch of width, I folded it over by 1". - Likewise, I folded the fabric along both edges of the back opening by 1 5/8": the 1 1/4" width of each lacing panel plus the 3/8" seam allowance at the edge. - In short, I made sure that any width added by the fitting aids was subtracted from the width of the toile.
I chose not to leave space between the back panels because, based on the relative sizes and positions of the bust and hips, (and also considering the time period,) I believe the corset was designed to be worn fully closed. This is not to say that someone couldn't trim the back pieces down to allow for a gap!