What a great idea - an outside wall hanging! Cool!
If you used painter's drop cloth, would that work? They come in about 10 to 20 feet for a section and they're really inexpensive! They're medium- thick cotton ( I think) so you should be able to dye or paint it. You could use the same method as making a floor cloth, that's should help against mold and mildew, layer it with another treated drop-cloth, and then quilt it with something that won't rot in the light - I can't think of anything off the top of my head here!
It would be unique, and durable, and dyeing is not too hard... it's an afternoon's work preparing the fabric but pennies compared to using quilting fabric! You'd be able to leave it outside all the time then as well!
Just a thought...
http://www.netw.com/~rafter4/floorcloth.htm
http://www.hgtv.com/hgtv/dc_floors_cloths_mats/article/0,1793,HGTV_3411_1389538,00.html