Since I got this running correctly I figured I’d share an example what what works well as a PHAT asset but not as clothing:
This (al-tough still not unwrapped in some areas) is made specifically to be socketed to the pelvis (which has a -90 rotation just to make you want to cry when you edit the PHAT).
The settings in the Phat provide an individualized simulation with a much better result than cloth.
The character mesh has been given 2 specific collision capsules socketed to the thighs in order for the simulation not to clip (too much) into clothing and other parts.