Continuity mistake: In the scene where Pacha and Kuzco are drying off after they fall over the waterfall, the slot for the wearer's head in the center of Pacha's poncho is clearly visible when Kuzco takes it and uses it to dry himself off. Following the shot change between when Kuzco throws it and when it lands on the fire Pacha is trying to light, the poncho becomes just a solid green square towel with no hole for the wearer to put his head through, which is easy to see when Pacha hangs it backup on another tree. (00:32:07)
Answer: It is probably attached with the equivalent of a piece of Scotch tape rolled over itself; I'm sure you've done that before. It wouldn't be visible to the naked eye, and Yzma would be able to flip the label up.