What tools/products do you recommend I need?

DreamHost.com Hosting
DreamHost.com offers Managed Reseller Hosting for $7.95.  With this plan you get 200 GB of storage, 2 TB of bandwidth, and you can host unlimited domains.  This is a great hosting package to use to get the most out of your cloaking efforts.  Peter, the creator of Search Engine Cloaker, endorses and recommends DreamHost.com for use with his product.
COUPON:  Use the code SECTUTORIAL when ordering and get a $20 discount.

Search Engine Cloaker
Search Engine Cloaker (SEC) is the engine or brain of our system.  This is the main product that we will use to manage and perform our cloaking.  You can purchase it by visiting SearchEngineCloaker.com.

Template Add-on for Search Engine Cloaker
The template add-on for SEC allows us to control every element of our cloaked pages, so they are optimized for the search engines and get the best possible rankings.  When you purchase Express Website Installer you will get a free template.  You can also purchase templates from KeywordCandy, but these will need to be modified with the use of Express Website Installer.

Static Add-on for Search Engine Cloaker
The static add-on for SEC is essential to keeping your high search engine rankings.  Basically the way it works is that when a search engine spider visits a cloaked page, the static add-on saves the content that it showed the search engine, so it becomes “static”.  The next time a search engine spider visits the same cloaked page, it will be shown the same content and you will keep your high rankings.

Express Website Installer
This is our own private-use program that we have decided to make public and sell.  Express Website Installer basically does everything you can imagine by clicking one button and waiting a couple minutes.  All the small, tedious tasks that take hours to do per SEC install are done by this program.  This program is designed to use specifically with this tutorial and our proven methods of creating quality websites. 
Click Here to Watch a Video on How Express Website Installer Works

WordTracker/KeywordCountry
These two programs are not necessary, but they make finding quality keywords so much easier than other free products on the market.  You will only need either WordTracker or KeywordCountry.  These two programs are a little pricey, but you will make up for that price by being able to put the time these programs save you into developing more quality websites.