I'm also very interested in being able to utilize VWD for morph targets.

I was able to do one level of morph targets with the first iteration copy of the cloth mesh by first saving (send pose to host) immediately after loading cloth into VWD's scene viewer. Next, I changed the name amending the _VWD to something like _Sim01. Then I used that mesh copy (created by VWD) as the cloth mesh to be simulated. Once simulated, I saved the current pose again, and changed name to _Sim02. I could then export the sim-ed mesh with default OBJ settings for MT's, and re-import it as a MT for the first mesh copy (_Sim01).

The MT worked with out vertex explosion. Unfortunately, this only worked for the first iteration, because if I repeated the process, any subsequent sim-ed versions' vertex order was destroyed, and all new MT's resulted in mesh explosion.

So, basically, you just need to get a handle on maintaining vertex ordering, and I know it can't remain the same for original meshes. Since, we are really working from the copies that VWD creates, you can work to see if we can bring this to the forefront. Also, there will need to allowances for the two different copy versions that could be created via either a straight copy of the original, or a Sub-D/tessellated (make compatible) version using your tessellation algorithm. I tested against both Sub-D, and direct copies. Both yield positive results for just the one iteration.

Since you are working with python, perhaps check the vertex ordering coding in Blender's OBJ import/export scripts to see how they were able to maintain the ordering.

I hope this helps...