i own this scarf... there's no way it's knitted. it's machine-made all the way, probably in china.
i think it was $28 or something... you should just buy it. and save yourself the insanity
I think it's kind of fun trying to figure it out, you feel very proud when you finally get it done. Plus, I would personally never pay close to thirty bucks on a scarf, especially if I knew there was a way I could figure out how to make it...but, I'm cheap, soooo
my point is, it is not knitted. it is machine woven. you can spin your wheels all you like trying to figure it out... but you can't turn an apple into an orange. it also has 15 different colors in it... even if you buy the cheap stuff (like i do cause i have no money either) there's no way you're going to spend less than $28.
if you want to make a vertically-striped scarf that is self fringing... that's another story. i have made them before and they do turn out wonderfully... my friend kyra in fact just finished a huge menswear scarf using this same method... http://kyra.typepad.com/knitmeister/2004/12/the_scarf_in_ny.html
get some really long circs (40" or so) and cast on somewhere in the neighborhood of 400-500 stitches. when you come to the end of a row, leave a 7" tail and cut it. begin each row with a 7" tail as well. once the scarf is the length you want, tie every other tail together and voila-- fringe.