Whilst having a wander around pinterest as you do I found this
and loved it so much I decided to give it a go myself so I have written a little tutorial of what I did to create the look.
As luck would have it a local charity shop was having an everything for a pound sale on Friday, and I found the perfect denim shirt for upcycling
Be careful as you are doing this, as you can see from the finished photo mine has puckered slightly along the bottom edge
And here is the finished article, you can make the cutouts as deep or shallow as you want, you could insert a lace panel, using your cutout piece as a template and cutting maybe 3/4" larger all around and tuck the raw edges under your folded raw edge to enclose your raw edge of your lace panel.
Just try it out and find what suits you, happy recycling