Other than SoM's 'Blue Sky', I never thought of the textures as clouds so much as mist. So it made sense that they moved fast and close to the ground.
I think that idea could work well Todd; the only problem might be that it could leave straight edge looking transitions in the sky depending on how you handle the textures. Also, SoM renders the sky model screwy so you can't really put one 'layer' partly in front and partly behind a different layer. In other words, people could see all of the 'folded square' shape in your example picture even if its corners go behind the dome shape. But, its shape wouldn't have to actually be a square so you could just make it end at the dome.
In real life, clouds go all the way to the horizon, but they get smaller, move slower and have less contrast as they approach the horizon line; you can mimic the less-contrast effect using a fog layer, but SoM can't really make clouds get smaller and move slower near the horizon. In life, clouds don't move much to the naked eye anyways so personally, I would just use a non-moving texture with built in perspective for a cloudy sky. Or, you could make the fog layer so thick that the moving clouds almost disappear near the horizon.
