This is a great idea but if the shirt is way too big, is not pretty at all.
A tailor at a dry cleaners here would charge me only 5 dollars (US) to take in the sides of the shirt. If you have someone that can do that for you, you should go for it. I fix my pants too for 5 dollars (basically 2.50 per leg).Sometimes I love the pants designs but the legs are wide, and I like the skinny legs pants. Hope it works for you somehow.
CHANGE MY MIND GUYS:
Today on TV they showed kim Kardashian with a oversized man sweat shirt and some biker shorts. In her waist she had a fanny pack (they are coming back in style) She took the left side corner of her sweatshirt and tucked that between the fanny pack. The look was great, although the sweatshirt was so big you could hardly see her arms. I was trying to get a picture but since this happened this morning I can't find it yet.
So, hope it helps some.