Ok, I see what is happening now. When using your method, and you start the simulation, even though the dress scaled down with the body before the simulation, it snaps back to it's original scale at frame 1 during the drapping process while the body stays scaled down. This is why I have been unable to shrink wrap a dress down to a figure while parented because if I scaled the dress up at frame 1 in order to shrink it down to fit by frame 30 it just snaps back to it's default scale when the simulation starts.