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If an action says I must return a card with a specific keyword (such as trading a card with the keyword FABRIC for a 149 card), may I return a blocked card with that keyword, or does it have to be unblocked?

Well... some people interpret the rules blocked purse have no effect except its weight. And keywords are part of its effects. So no, blocked purse cards have no keywords.

(On the other hand though... some game effect check if you have a card with a specific keyword AND unblocked at the same time. This only makes sense if blocked cards can have keyword. So I am not sure myself.)

I would think a cumbersome item would still make it hard to move even if damaged (e.g., you can't use "On the Double" if you carry an item with CUMBERSOME). So... Maybe it's okay to trade my torn Cape? The rules do explicitly say to interpret them in my favor if it's ambiguous

No, blocked cumbersome items don’t count and you can move.

I would love an offical clarification of this.

I approach this thematicaly - I assume a blocked item is like a broken/damaged item.
So I would not trade a blocked item, since that item doesn't have it's origianal value.
However, I would still consider a blocked item CUMBERSOME - for example, if you have a blocked (=damaged) armor, it is still heavy and big, so it makes sense that it's still cumbersome.

@Karbous: I agree. That sounds very reasonable.

The keywords of blocked cards are indeed ignored, including for the keyword "Cumbersome".

The trouble I find with this answer is that it creates a new contradiction, in that many effects that allow you to unblock a card (e.g. Smithy building) target cards with specific keywords. But if you are supposed to ignore keywords on blocked cards, you wouldn't be able to target the card with the keyword to unblock it.
It seems to me more logical to treat keywords and weight, along with other properties like card type, title, or number, as something different from effects which should be ignored on blocked cards.
Again it seems that in the event of a contradiction the "most logical" resolutions take precedence. Related to the original question of "trading", what the rules say about blocked cards is

I take this to logically include, "may not be used in trade."

Good catch! I can totally see your point and you are somewhat right but obviously, you have to consider the keyword when unblocking otherwise no unblocking would be possible. Nevertheless this is on point and maybe the interpretation would be that you unblock one card which will have the specified keyword after unblocking.