Cape/cloth physics is much like rope physics. Basically it’s made of a bunch of point that have velocity and fall with gravity. Then you keep track of the distances between pairs of points, and move them closer toward each other if they are too far away.
Anyways one way is to use the physics behavior and connect them together with joints.
Another is to use event based physics. Look up rope or cloth physics for examples.
In c2 you have a third party plugin like paster to distort the image. Or you can just fake it with sprites.
As far as the simulation itself you’ll just have to tune parameters. Maybe more air resistance or less gravity. A more elaborate sim might do the physics in 3D, or limit not only the distance between points but the bending angle. Also another idea is to make the air drag depend on the angle of the parts of the cape, probably a lift/drag model like planes use. Finally adding collisions with the player or with other parts of the cloth itself could look cool. It just depends how deep you want to go.