There's a tricky way to do it, yes the center back seam could work, but to keep the shape of the body I recommend you don't cut the back open. Another option is opening the back and then gluing in a 1" strip, that should give you enough room in the neck.
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Yes. It should give the neck hole the room you need, and still keep the body shape. But if you use good velcro, you can probably get away with that as well.
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OMG! That head looks amazing! How did you make that glowing part on top of the head?