In Masters of the Barebow vol. 3, Denny Sturgis discusses some of the changes he made in his shooting form as a result of his blank bale work. One of the changes he made was to close up his alignment, as you describe, for the purpose of AVOIDING string contact with clothing. This seems somewhat counterintuitive, since it seems like it would increase clothing contact, but if you will look at his portion of the video, which is toward the end, you will see how he did it. Rather than the string coming across the front of his clothing as it would with a more open stance, it comes into the side, so while it may push against the side of his jacket, it doesn't brush across the front of it. This is similar to the way some women avoid string slap on some of the more delicate parts of their bodies.
I think closing up the alignment does increase the likliehood of string contact with the bow arm, but that is easily avoided with an arm guard, as discussed above.