I would do a cape like a dress. That is have the neck, chest, abdomen, and hip parts, but include all of the bottom as part of the hip. Then add a morph to allow it to spread or fold . A few extra morphs to turn up the botom ends as well.

That would allow the cape to conform somewhat but still be positioned for flight.

Dynamics would be easier though , use the wind thingie to make it flutter.