Isn't this really more of an engineering issue, than an art issue? A hooded cloak's "hood" art piece could take up an invisible (to the player) equipment slot that is drawn "on top" of the head and thus anything worn on the head. Since there are already two cloak designs in the game (regular hoodless 'cloak' and 'the cloak of Humility' - which HAS a hood*) the new art requirements would be minimal, its just getting the hood to draw in the right order.
(* You can see that the hood on the Cloak of Humility is intended to be "up" in the artwork. However, it is under the hair on the paper doll and in-game avatar)
