I've always been a little wary of actor morphing ever since my brother told me if your romance died it reset the romance. Should I be concerned or is Cloak of the Wolf safe for my PC to use?
Whether it's good or not is another matter :P
Being polymorphed, with the spell, or an item, isn't the same as being killed. What ends the romances [depending upon what fix-pack or other "update" you have installed] is dieing, including being turned to stone [which is considered "death" for the purposes of the romances, even though you can recover from it without being raised or resurrected.
So, for example, if the PC uses the Cloak of the Sewer to become a Troll - that doesn't alter the progress of a romance, since they are not dead, as the game engine understands that term.
So polymorph away, it will not affect your romance. And yes, whether or not the CotW is worth more in use, or sold for gold, is quite another matter... ;)