Reels...I have several miles of various widths and thicknesses of spring steel in my shop for making assorted types of reels. I've been experimenting with custom reels for quite some time. You may see progress on a reel here: http://jamesriser.com/Magic/Cage/Project.html
I really need to finish that web page (no free time to get back to it).
The reel for this effect does not need to be custom made - just modified for silence and with a nylon cord rather than the original chain. The reel that Tommy Wonder utilized for this effect was a modified "key-back" type of reel. This is not the type of pull used with a birdcage. These key reels are available in several types - all having a chain for the cord. You want one of the more expensive models (all metal and the inside drum runs true). Avoid the cheap versions from China and the half plastic models. They either fall apart or run off center causing the drum rim to rub and make lots of noise.
You will need to open the reel to add silencing pads and to replace the chain with nylon cord. These can be done at home with no special tools. Be very careful that you do not let the inner spring unwind into your face. You should be able to do the modifications without disturbing the spring. Grease everything while you have it open.
BTW - it is best to not attach the reel to the jacket itself.