I think I have killed Toko Binlittle about a dozen times. Toko is the pirate over by the tent near the Giants and Cyclops right? If so, then I have indeed killed him about a dozen times, and he never dropped the cloak. I guess this doesn't mean that he doesn't drop it, but if he does it is not a common drop. Also, I killed him before the last patch. So, maybe they added it when they added diamond dust. Don't know. I am bound over there; so, I will try to go kill him another 12 to 20 times to see if he drops it. I'll report back in about a week.

Gantorek Ttefabob of Clan Cathar
Level 34 Wizard on the Povar Server
103 Skill Tinkering (only about 253 attempts or 54,395 pp from maxing aqualung skill)