how should my argyll jacket fit?

[Tobus]

Yes the jacket should be able to button, but as Steve said, it is not meant to fit loosely or comfortably when buttoned. The fit of jackets in the UK is much different than the "potato sack" fit that Americans are used to.

I prefer my kilt jackets to be very snug when buttoned, to the point where it's not really even practical to button them. Why? Mainly because I don't want extra material flopping around in front of me when I walk. If the front of the jacket has ample room to be buttoned, that material is going to be "somewhere" when it's not buttoned. It's either going to splay out in front of your body or, when the wind blows and/or you walk forward, it will fold back. But by limiting the amount of material there, even by a tiny bit, it does help minimise that annoyance. And when it's not buttoned, it drapes nicely with enough of a gap to display one's waistcoat, or tie if no waistcoat is worn.

This is not to say that I want a jacket that's too small. As others have said, it should fit nicely (but snugly) in the shoulders and around the back of the upper torso. Ideally, it should have a good taper at the waist and not hang like a potato sack (I find that many modern kilt jackets lack a good tuck/taper at the waist area). The tapering does help with the hang of the front when worn open.

As you already appear to know, kilt jackets are not meant to be worn buttoned. This seems to have evolved from the older historical jackets and doublets that were worn open in the front and were tailored to never even be possible to button up the front (despite all their fancy buttons that were just for decoration). For me, part of the iconic look of a kilt jacket is that it is form-fitting everywhere, but open in front.