Finished the top half of this character so I figured I'd post what I've got so far. Concept is by Rodrigo Balmaceda https://www.artstation.com/artwork/4Kw82
Open to feedback, I really have no idea how to get cloth looking soft in unreal engine. Also maybe like it on artstation if you feel like it https://www.artstation.com/artwork/KOkxZX :)
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I quite like it! Great concept, and you executed it perfectly, to my mind. Weird concept, weird final piece.
Maybe adding a fresnel to the cloth / rope could bring some of that softness you're looking for? The documentation should be of help, if you think that could work.
Or maybe unreal has a built in fuzziness / microfiber shader setting, the way marmoset does? I know back in UE3, a fresnel node was the way I learned how to do it, and it worked reasonably well. You could also use an AO map as a mask to stop the fresnel from showing up in the occluded darker areas.
But! I'm no character artist, so I'll stop there; there may well be a much better way these days.