Not that its an easy task, mind you, but its totally possible to make clothing in blender, on the fly.
Very similar to MD - and free mostly, though you should probably donate to the modeling cloth developer if you actually make a profit using his addon, but my opinion is unpopular 
MD is great for some stuff. Definitely a faster solver.
however in both cases, with chaos coming in, things have changed somewhat.
The baseline workflow is still the same, the paint is also still mostly the same - and thats a shame. I was really looking forward to changes to that pipeline since the way nvcloth was implemented into the engine was anything but right, with backstop not working at all, and the distance of the vertex not being anywhere near the correct radius.
For OP - yes, you definitely are fighting against engine changes like donchichotte fought windmills about 90% of the time you make characters.
In conjunction to bad marketplace asset rules - forced epic skeleton compatibility is just wrong - this is the reason you don’t see very many modular character in the marketplace.
@TechLord
ARK did the replicated character bone scaling mess 4 years ago (or more?) - they used that. Because its easy to replicate.
I’M positive I recently saw a plugin that did this with replication on anything - you just can’t expect it to look any good at all. After all you are literally deforming a mesh.