Where to hem and hook curtains?

I'm making some curtains for a multi-use room in our house. Sometimes it is a guest room (with Murphy bed that folds into a nice cabinet) but most of the time it is a playroom for Mo.

The curtains have to be pretty for guests but not fussy and beatupable for Mo. I bought some pretty but washable fabric and want to do something kind of casual.

The biggest problem is that since we don't have air conditioning we do want to make use of the double hung window for ventilation in the summer, meaning we don't want to always cover the top part of the window.

I came up with a two-stage curtain idea where the curtain is pinned at the top and a few inches down will have these button hoops (I don't know how else to describe them -- the look like the hoops you find on some Asian style jackets)
that attach to knobs on the window frame. The knobs would also be used to tuck the entire curtain behind when you wanted the curtains out of the way.

My questions:

Where should I install the top hooks? On the interior of the window frame, on the exterior surround or on the wall over the whole thing. I envision these hooks as a kind of "jewelry" and think I have found the pieces I want to make them from. Each window would have three hooks for a total of nine altogether.

Where should I hem the curtain? At the interior edge of the frame, the exterior edge of at the floor? (Ususally I would think the floor but as Mo uses this room more than anyone else I think that may be asking for trouble.)

Here's a crappy photo -- I just pinned the fabric to the window, it's still attached to the bolt since I don't want to cut it until I have some idea of what would look best.



Thanks!