You're right that any canvas stretched around the frame could act as aerodynamic stabilizer fins. The pendulum rocket fallacy is the assumption that a higher mounted engine will stabilize the rocket's direction
due to it 'hanging' from the engine, by analogy with a pendulum (where the higher a point you 'hang it from' the more stable it is). The fallacy lies in the fact that the pendulum is hung from a fixed point which can apply forces to generate a stabilizing torque, whereas there are no such outside forces generated by the rocket engine (other than the thrust it produces).
Fins totally work and that's why almost all rockets use them to some degree for stabilisation while in the atmosphere.