How Should I Fix This?

I really like this bag - it is just so fun with the sparkly pink kitties. The only problem is how badly I flubbed the handle area. I tried a pink felt overlay...it did not work! So I experimented with more stitching. I figured why not, I was gong to cut it out anyway.
So my question is this: Do I try to salvage the design and recut the handle or take hours to remove the felt & resew another overlay or just chop off the top portion along the bottom curve of the handle and put on straps?
Any other ideas are greatly appreciated.

Addition: After reading some comments that were asking what was wrong because they didn't see the problem...I decided to add these last two pics. And yes, I know I can be a tad picky...aren't we all about our own work? But it's just uneven & kinda shoddy. I have been thinking that I may try to cover it once more with a solid piece & think of the felt as padding or interface :) Worst case - I am back to where I started. And I like the PIF idea if I can't get it the way I like.

This was the first handle of this sort I have tried and the many instructions I have read for this type were all confusing and contradictory. If anyone has seen a clear tutorial please let me know.

Thanks again to all those who responded.