Whatever is used for "containing" the chalk, paper, wadding tissue, cardboard or whatever, needs to "open up" so the chalk is ejected. Alternatively, could put
a layer of chalk powder over a borate/borax treated cardboard "bulkhead and put a little wadding in, lower the cardboard circle down over the wadding, pour
in a layer of chalk, put the chute in. I find if the rocket goes really high, the puff seen is a colorless white cloud. If there is overcast, it's hard to see the "puff".
Down lower still well within "eyeshot", some perception of color might be appreciated. Ewwww ahhhhh, effect if any.
A long silver mylar streamer though they are fragile, one can reinforce the edges with scotch tape so it doesn't break, fanfold it to put creases in it and may roll it up on the shock cord. Even if there is a chute, when it unrolls, it will likely flash in the sunlight and one will see flashes even though they can't see the rocket.
Again, if there is overcast this might not work so well.
The powder gets into everything, the chute the chute protector the harness. The "powder" event is a one shot deal whereas the silver mylar streamer can flutter and reflect sunlight all the way down. Even if it's hanging limp on a harness that has a chute, it stands a chance to make a reflecting signal.
If there's room for a beeper add that and if it lands in tall vegetation, one stands a good shot of recovery. Add a handheld mapping GPS with a sight n' go feature, meaning you can shoot a line from the GPS to the descending rocket to lock in a datum to follow and one will have the best non-radio tracking rocket recovery
system for flights that land just inside ones limit of vision.
Walk the line on the mapping GPS until one hears the beeper and let the ears do the final "homing in".
I've had a two stage modroc that goes on an E9-0/C6-7 with a streamer but with a loud homemade beeper on the shockcord. Sometimes the streamer isn't seen but by golly I was looking to the south after launch one time (and I lost sight) sure enough, I hear the "screamer" and rattling of the streamer. I had to swing my head around to the north and saw the sustainer land a little ways in to standing corn. Didn't have the "sight n' go" GPS with me that day but I was able to visually lock a line. Walked into the corn and by golly, ones ears are a good homing device within 20 feet! Kurt