then my balloon burst when I saw that the sett size was 3 inches...too small for a kilt.
This isn't necessarily a disaster. You can always double the sett and make one pleat every two setts.

The other thing to think about is this. Because this is Black Watch, it's easy to get the sett size wrong because it's an ABAC tartan. Are you sure the sett is really 3"? Could it be 3" between the black stripes in the green? If it's the latter, then the sett is really 6". Would be worth checking.