AFAIK everything in nCloth solves per-vertex always. Even if a given vertex isn't interacting with something, it's still part of the calculations and can slow the sim time down.
Spherical harmonics or vertex lights are probably the cheapest way that Unity will light a m each for you. It all happens at the vertex level so it's about as cheap as you'll get it.
Probably not. It never occured to me to use a vertex paint modifier to select the faces using vertex groups. Tried out the mask modifier. That's really cool man. Thanks.
Convert the polygon selection to vertex selection (ctrl-click on the vertex subobject icon under the Selection header) and move them in Local coordsys (without using normal constraint).
be aware that vertex-count will be higher, due to the fact that when you have vertex-color,smoothing group or UVmap splits along edges, those vertices need to be duplicated.
To be honest the vertex density might be good enough there that you can get away with vertex lighting (lightmap resolution 0) worth experimenting with if you didn't know.