My preference would be to leave the fabric as uncut as possible.
I wish I was better at graphics.
Imagine one piece of fabric per window section - contained within the frame. Sew tunnels out of a co-ordinating fabric along: 1) the back at the line where the top of the fabric should be when you want the top section of the window uncovered; 2) the bottom of the curtain. Tension rods would run through the tunnels. The fabric should be slightly billowy between the two tension rods.
Above the top tension rod, have enough fabric to be proportionally billowy to the bottom section (not a big pouf/poof, just enough for a little drape).
I'm assuming the fabric is 'good' on both sides here.
Use the frogs to attach the top section of the curtain to the inside of the frame (velcro the top half of the frogs onto the frame) when you want a full curtain effect. I'd consider spraying the fabric with a starch at the top to give it some oomph - don't want it looking droopy between the frogs .
Let the top section of the curtains fall down - toward the room - over the bottom section when the frogs are released. You'd have a two-tiered fabric effect, sort of peplum-y - with the half frogs as decoration.
I think the trickiest part would be figuring out which way to attach the frogs so that they'd look good whether they were at the top of the frame or at the bottom of the 'peplum'.