Adding a hood to a 5×9 poncho without a ridge line seam.

http://royrobinson.homestead.com/ponchoplans.html I've used the above pattern. The hood isn't a great fit because it only has one seam, but it's perfectly functional. I'd use it again in a heartbeat.

Make a standard poncho hood, then slit the fabric and put it in like a welt pocket.

Thanks David! That looks perfect and is just what I'm looking for. On an aside, does everyone think 6×9 is too big for a poncho tarp?

Depending on how tall you are, it may not be too big at all, at least lengthwise. I'm 6' 3" and I find a 5×8 poncho sketchy at best for use as a shelter in bad weather, even with a breathable bivy sack, although it works fine as a poncho for rain gear. I'd like to try out a 6×9 poncho while hiking just to see if I can control the extra material. If you are fairly short, I'd imagine the 6×9 might be too long while worn as a poncho unless you rigged up something like the Gatewood Cape has to gather the excess material.