Methinks you are dealing with a Mondegreen here.

The term comes from a mishearing of a line in "The Bonnie Earl of Moray."

Ye hielands and ye lowlands, oh, where hae ye been?
They have slain the Earl of Moray and laid him on the green.

Someone heard it as

They have slain the Earl of Moray and Lady Mondegreen.

and wanted to know who "Lady Mondegreen" was.

I'm pretty sure that's what you are dealing with here. I do a version of Mattie Groves in which what Mattie was wearing isn't mentioned, and I've read the texts of a number of other versions where that is true also.

I can imagine a version in which a line might say that Mattie Groves was "cloth-ed all in green."

Could it possibly be something like that?

Don Firth