My comments are from an historic preservationists perspective and not as an expert in making CW equipment. The term Oil Cloth far predates the CW and was primarily a floor covering in the form of a small rug. They were extremely rigid and not intended to be pliable at all. I would eliminate the corn starch completely. What is available to us today as Turpentine is probably not what the recipe is referencing to. Mid 19th c. Turpentine was available in two grades. The Turpentine mentioned in the recipe would have been a highly distilled version with almost all of the gum removed. This is same material used in early lighting devices and marketed as Camphene, first emerging in 1832. Undistilled Turpentine was a problem for cotton lamp wicks for same reason it would be a problem in making a poncho. Too much gum which will dry hard when the spirits evaporate. Remember, paints didn't start as liquids. They were purchased as a dry pigment (powder) to be mixed with binders and aggregates when you received them. I haven't done a lot of research on the CW recipes but I know couldn't duplicate them by picking up ingredients at the local hardware store. That's a problem in architectural historic preservation too, but there's usually a way to recreate 19th c materials.
Based on the amount of period painted goods I've been blessed to see, I would respectfully disagree about the advice of skipping the starch. Starch was used during the period to fill the pores and weave of the material as well as smooth the material for the proper application. Without the starch, you don't get a good, even distribution. A secondary reason for the starch was to protect the material from breaking down from the harsh properties of period paint. When the paint begin to crack and loosen in used goods, the paint will just flake off of the cloth and makes it easy to touch it up when needed. The proper use of starch is critical to getting the right look, feel, and application of painted cloth goods.