Yes, the green check-mark, and about as shown, which would put that gusset into the bottom of the armscye in the pattern pieces in your pic, not all the way down towards your waist. (Don't bother making the arm-hole
that big.) As I said, starting near the armpit and ending near the elbow.
If you find you simply have too much in that upper sleeve with the gusset in, rip it out again and cut the gusset narrower to remove the excess cloth.
This should give fairly easy fit in your upper arm, which you want for mobility. Enough to slide your flat hand and straight fingers into, between the sleeve and yourself without difficulty. The forearm sleeves is to be tighter and should fit about like, oh, two thick coats of paint.

Like a sweater sleeve conforms to your arm. Can't really push your hand into there.
Even the "à grands-assiètes" armhole only goes somewhat farther down your sides towards your waistline than the usual kind of armhole. Most of that armscye's huge size is scooped out of the upper back, the pectorals, and the shoulder -- the shoulder seam runs about 3cm from neckhole to arm hole in that style. You're not making one quite that extreme -- a different style, every bit as good.