Pick up or pick up and knit?

I'm proceeding nicely with the boy's Baby Surprise Jacket, by Elizabeth Zimmermann. My target baby was born in February (or March?) but weighed over 10 lbs. DH, who works with baby's father, keeps saying how remarkably large the boy is. I finished the increases & back extension, so the next row I'll knit is the row where one has to pick up the stitches on the side of the extension for the back length of the jacket (otherwise it would be a baby surprise bolero). I have picked up stitches before but am nervous about this one. Mostly I think I'm nervous because it's looking so nice and I am eager to produce a lovely wearable product for this family of whom I am fond.

I have thought ahead enough that I am going to be picking up in purple, so I planned a purple row as the bottom of the back section, and all my stitches on holders are also purple. But I'm troubled by the 'pick up and knit' instruction. Let's see if I can talk about it and show you what I'm worried about (since I cannot yet post photos).

A - - - - - - - - - - B

If that ^little graphic represents the edge of my garment, I'll be picking up from A to B, and the little dashes reprent the 10 stitches I have to pick up.

Now the question: is my complete action to draw the working yarn through the edge of the fabric, creating a working loop to use the next time I knit that row? Or, do I have to draw the working yarn through, creating that loop AND knit into the loop that I created?

If I have to do the 2nd (pick and knit), do I do it one stitch at a time? (Otherwise, I'm thinking that my working yarn will end up at B and I won't be able to work the stitches closer to A. Is that right?)

I'm thinking that the correct answer is the first one: to just pick up the stitches and knit into them the next time I come to them on the needles. I know, from the KnitBabySurprise group at Yahoo! Groups that I should turn the work over and pick up from the right side -to place the bumps on the wrong side. I was just going to try a few stitches and then look at it to see how I liked it.

Any ideas or insights? The last time I had to pick up and knit, it was to turn a rectangular piece of fabric into the bottom of a tote bag, which was to be fulled (felted) after it was knit. So it didn't really matter how it looked.