My friend has this cloth you describe on his bow. I imagine if the rain is not blowing sideways it allows the hatch to stay open too.I've always found that shading as much of the boat as possible works well for keeping it from getting oppresivly hot inside. Biminy or canvas over the boom, another bit (triangular) from mast to bow with the front corner fastened at the bow and the base fastened at each side, kept high enough to allow airflow. May not be exactly beautiful, but does lower the temps on the boat enough that you can sit comfortably in the cockpit, or go below without melting.
We use a white canvas awning over most of the boat - helps enormously and you can open the hatches underneath even in rain. I also have a chill cloth - a tube of cotton fabric wrapped around moisture-holding beads. You soak it in water and put it in the fridge, then drape it around the back of your neck. It holds the cold for an hour or so, and is pretty effective even in the HHH days (hazy, hot, humid) in the Chesapeake. I found mine at a farmers market for $5.