If cutting the bulk away is the only way to make the sweater fit properly, I would try this: first stitch a line across the sweater where you want the hem to be, then cut away the bulk. I would then make a small zig-zag stitch along the new hem line, to reinforce the edge.
If you haven't already washed the sweater, you could try washing it in hot water and it will probably shrink. It might just fit perfect then
