I'd opt for either a quarter-round or a rounded pencil liner trim piece that matches the subway tile you've selected (from the same manufacturer.) Add baseboard to the wall/floor transition and have the tile/line meet the baseboard.

Fur out the studs before you apply your backer board and waterproofing. Or just Kerdi board. Or Wedi. It’ll get you a straighter wall to boot. 1/4 round tile piece will conceal the edge.

But what waterproofing system are you planning?

Your 1-1/8" measurement is to the back side of backer board as the board is to continue down past the flange. Simple solution is pad the studs out 1-1/8" as needed. Apply bullnose/cap on the face vertically overlapping a return tile 1-5/8" at the window edge. It will be a clean look instead of introducing another profile which will just draw attention to the build out. IMO. Don't forget to fir out the other walls past the flange also.

Thanks for the suggestions everyone. I did the rough in work while my family was out of town for a couple days and I'm FINALLY getting back to the project. Luckily we have three bathrooms ;) The plan is to furr the rough studs to the tub, 1/2" backerboard and then use a quarter round tile at the transition back to the existing drywall.

I would like feedback on the baseboard transition. Three options:

1. Run the tile and quarter round tile down to the floor and run the baseboard up to the quarter round.

2. Run the tile down to the floor, run the baseboard up to the tile, then run the quarter round down to the baseboard.

3. Run the baseboard up to the tub, run the tile and quarter round down to the base board (tile may overhang baseboard slightly)

Thanks so much!

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