Yeah, it's ambiguous. I interpret the "you can be one foot taller or shorter" to mean you, and something like a hat or ridiculous hair can just be as large as you like so long as it still looks like an item of clothing and not (say) a billboard.

Of course, at very large sizes, something's going to clip into the illusion every now and then, so it'll obviously be an illusion to anyone who is around it for more than a few minutes. I'm imagining small birds trying to land on it and faceplanting into your head.