I was curious about this so I got on my trainer to see where my knees hit in relation to my arms.

I dropped my elbow low enough that it hit my knee. My elbow hits exactly in the center of my knee right above my knee cap.

I'm quessing that there is 2-3" of space between my thigh and elbow when the pedal is in the 12:00 position.

Starfish, no my bars are not significantly narrower than my shoulders. My shoulders were measured at 34cm.

I use Campy Record and got the Modolo Venus handlebars. They are a dream come true for me because they come in a 34 cm and the drop is designed to bring the reach of the brakes closer so I can reach them with my small hands.