Preheat the oven to 350°F. Line two large baking sheets with parchment paper.
Unroll pie crusts. Cut out cookies using a 3-inch sweater-shaped cookie cutter. (Do not re-roll dough.) Place cutouts on prepared baking sheets, spacing 1 1/2 inches apart. Bake, rotating the positions of the sheets halfway through, until golden brown, 12 to 15 minutes. Cool completely on baking sheets.
With an electric mixer fitted with the paddle attachment, beat powdered sugar, meringue powder, and 1/4 cup warm water on low speed until smooth, scraping bowl occasionally, about 7 minutes. Transfer one-third of icing to a resealable plastic sandwich bag. Squeeze it into one corner, twist the top to keep the icing in place and snip a tiny hole in the corner. Pipe an outline on each sweater. Let stand until set, about 5 minutes.
While frosting sets, add another Tbs. water to the remaining icing in the mixer bowl and beat until smooth. Divide icing into various bowls and tint each as desired with food coloring. Spread a thin, even layer of this icing inside the outlines on sweaters. Let stand until almost set, about 5 minutes.
Use the outlining icing, sprinkles, and candies to create "ugly" designs on the sweaters. Let stand until completely set.