Heh, I knew someone would say that Pixel! 
To be fair, the 'gaping' boxer-style pants were hand-me-downs which simply passed under my radar - I have a mate who is an inveterate catalogue queen & regularly passes on bags of barely worn stuff. Frankly, it never even occurred to me that little girls' knickers came in different styles/cuts - they certainly didn't when I was wearing them in the 70s...
My preferred solution to the teeny bopper knickers would definitely have been to ruthlessly bin 'em as soon as dd1 mentioned the gaping issue. But by that point, dd1 had already noticed other girls wearing leggings/shorts & decided that was what she'd feel comfortable in.
It's a non-problem to me. Short cotton frock + cotton shorts = entirely appropriate clothing for school. No different from long t-shirt/tunic + shorts out of school.
Equally, cotton frock + sensible pants would be fine. Dd2 chooses this option.
I suppose I could have said to dd1: no, you absolutely may NOT have shorts under your dress. But I do think that would've made it an issue where to my mind there isn't one. I also feel unhappy about not allowing her to choose the clothes she feels comfortable wearing - if she doesn't want her knickers on show, well, they're her knickers.
If either of them preferred uniform shorts, like the boys, that would be no problem from my POV either - some girls at their school do wear these. Both girls prefer their gingham frocks!