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I know Elven Cloaks have been treated in fan supplements, but I just thought up an alternate scheme for their mechanics.

1) When use for Stealth, the cloak allows the wearer to roll the Feat die twice and take the best result. (Or some other such bonus; nothing new here.)

2) On the other hand, when the wearer remains motionless and wraps the cloak around him/herself (and potentially also a companion), the onus falls onto the other party, and any potential viewers must make an Awareness test against a very high TN (20+, depending on proximity) to notice the wearer.

So, basically, it does help with Stealth, but what it's really good for is remaining unseen when sitting still.

I think another way to use them is that they grant a temporary trait while they are being used "Veiled" (or something like that: Obfuscated, Hidden, Cloistered.)

And they would use all the typical rules for using a Trait.

Elven cloaks can be fitted by using the hobbit virtue 'Art of Disappearing'. Of course Hobbits with elven cloaks and this virtue would save themselves the Hope point....

You could just say that Elven Cloaks add +1 to skill, like the 2 Treasure gear bought in Laketown; but unlike normal gear Elven Cloaks provide that bonus even when your skill goes up.

Elven cloaks are covered in the Rivendell supplement under the Wondrous Artefacts rules. They provide a free Wisdom bonus to Stealth and also let the player narrate a magical result by spending 1 Hope point. Elven rope is also covered. The Wisdom bonus can be doubled depending on how the Loremaster created the item.

Using the Magical Treasure rules in Rivendell, an Elven cloak could be considered a Wondrous Artifact, with a Blessing to Stealth.

Add your Wisdom score to all Stealth rolls, and by spending a point of Hope you may get a truly 'magical' result (player's choice).

Honestly, I really like the Magical Treasure rules. They are incredibly simple and yet do the job well.