That's EXACTLY what Ihr means. Except for when it means "her," which should be evident by the context.

I'd translate it as Ihr alle seid schön (since it would be closer to the original sentence). Yet it doesnt change much if you say Ihr seid schön or Ihr alle seid schön. One refers to the group and the other one refers to the group and extra states that all of the group are meant. Same as in english if you use You (plural).

I did that and got it wrong. "Ihr seid schön" or bust.