As a disclaimer I havent done this but its something I have researched. I looked into making a pancho type ghillie suit to hide in the low coastal prairie grbootyes. Most of the guys that make their own suits take white and tan strips of cloth, canvas, or burlap and dye the strips in Rit Dye (which you can supposedly get at the drug store, again I havent done it). Seems like you could do a single color or as mentioned a tie dye look too.
As for water proofing I would check out waterproofing boot wax products. May not be the best option due to the magnitude of the project though. I have applied sno seal to my carhart overalls with great results. In a light rain or dew covered uncut field they shed water pretty good.