To clarify how this works: there is no "expanding" of the cloud. After every 3 seconds of taking damage, one cloud is instantaneously spawned - the way it's currently implemented you also effectively get one "freebie" cloud per ship life the first time you toggle tar on.
The visuals fade in more gradually in order to avoid being terribly jarring, but the damage and logical effects of the cloud (timing out spots, for example) should begin to kick in immediately. If you're seeing something otherwise, that would be a bug, but my own sandbox testing seems to indicate that I start taking damage immediately (testing by backpedaling into my own cloud.)
In the previous, bugged version, a cloud would spawn every third second if tar barrel happened to be selected; whether or not it was selected in between had no bearing, so you could avoid most of the damage.
No longer affected by wind: that also sounds like a bug, and this one I can reproduce. Logged for fixing.
EDIT: Also, Sammy et al, I do see your point about it feeling a bit unpredictable right now. Awkm and I have talked a bit about other ways this could work; I'm trying to avoid a complete rework of how we handle pilot skills right now but we'll see.