And thought oh no problem! (problem #1), I'll just get some batting and glue it to balloons or paper lanterns (problem #2) and hang it from the ceiling (problem #3). First off there's a big difference between cotton batting (more expensive, but more cloud-like) and synthetic batting (cheaper, whiter, less realistic looking but holds together better). First I tried rubbing and tugging the cotton batting (as instructed online), pulling it gently to create a cloud like shape and I ended up with this tiny misshapen ball.
Then I tried gluing pieces of the batting to a paper Chinese lantern (looked awful) and to a balloon (which didn't work as the hot glue immediately popped the balloon and super glue wasn't strong enough). Finally my husband (I think out of pity) suggested I try wrapping the synthetic batting around hangers in large clumps. This got me an initial form that held, but did not look like clouds.
So as he bent metal hangers and poked them through the batting, I began rubbing and tugging AND (this was important) pushing and pulling. Part of the beauty of clouds is their ability to reflect and absorb light in random little pockets, to achieve that look you have to pull out and poke in in little alternating sections.
To hang them, I attached the hangers with fishing line from a pole I raised to be near the ceiling. This worked well but kept all the clouds in one flat line (but was great for getting them stabalized and in place). Since I wanted more depth to the image, I staggered the clouds using extra fishing lines (to pull them forward) and attached them to push-pins in ceiling, creating a more realistic effect.