You're more right than you realize, and not so archaic really. The texture of clouds, or even clouds themselves, mostly smaller, frizzy kind of clouds are called "pilvenhattara" where pilven is a possesive form of 'pilvi' - 'cloud' and hattara is kind of an abstract descriptive word, at least today. The translation of 'rag, tatter' is a bit more complex and at least a little unrelated. There might be some historic connection, since 'hattara' is kind of a descriptive word that describes (at least for quite a long time) a kind of specific type of clouds appearance, more so a small cloud that kind of just falls apart. It's more like a frayed rag and the 'hattara' specifically pertains to the raggedness/frayed part - like the actual physical/visual quality of it being kind of frailed or jagged, like a cloud and so it does relate to clouds.

Hattara as a mythological thing is a different thing itself and again, might have some historic connection - my best guess would be that the kind of creature it means is something that is kind of 'frayed' like a vision or a fog ora cloud or something and is only seen for a moment. I'm unfamiliar with that one, though I've read a ton about folk beliefs and mythlogy here.