This is the hippie chick in me coming out, but I have a theory I haven't tested yet...breastmilk. It may seem totally crazy, but my thinking is that if if can help with blocked tear ducts and cuts and scrapes, it might as well be worth a shot at cradle cap! :)
I'd squirt some on LO's head, brush gently then wash as usual. Like I said, this is just a theory, but it certainly won't hurt to try!