The cape is only as useful as about every other move. Used right its a good move. Used wrong and its usefulness goes poof.
Most important thing about using the cape is being unpredictable with it. If you ALWAYS use it, people expect it and start doing things to avoid being screwed by it like using Up-Bs to recover in reverse or straight up. Also will use B-airs instead of F-air so you're hit when you turn them around.
Be unpredictable, and it can be an evil tool instead of just a minor hindrance.
You do realize that if someone like squirtle or Marth Up-B the other way while Mario fakes a cape they're dead right?
That's a 50-50 chance instakill.
If I predict Mario's cape with an reverse Up-B, I hit him with a dolphin slash, probably do 13% damage or something, If I fail on my prediction and Mario doesn't cape I die.
"Every other move" doesn't have that massive of a killing potential.
Feinting it follows under using it right. Sometimes not using the move is just as good as using it.
Plus with both characters you mentioned, FLUDD + Edgehog alone is usually enough for Mario to gimp them. You can also change the main direction both those moves travel in. Holding straight up results in very little horizontal movement for both (Up+Back for Waterfall).
Bad recoveries are bad no matter what you're against~ The only 2 Characters completely screwed by using Up-B in reverse should be Peach and Kirby, both of which are the only characters that can't grab the ledge during their Up-B while turned away (Which annoys the living hell out of me). Tethers can be turned around while the tether is reaching out, but why bother when edge hogging them is easy as is.
If the cape were as good as everyone thought, wouldn't Mario be higher in any tier list? I've noticed Shea doesn't really try to cape me anymore and usually just goes for a spike instead.~