Those caps are great things to make. They're much appreciated.
Pattern 8 means to work the next 8sts in pattern, so yes, p1,k4,p1, k2 then k2tog. Then keep going with the sts as you see them, knit the knits and purl the purls for 8sts, then k2tog. On the next round, I would again knit the sts that look like knits (the Vs) and purl the sts the look like purls (the loops). You can't really go back to the p1, k4 and keep a nice line going because of the decreases. There are undoubtedly more decrease rounds to come so it'd be difficult to see the p1, k4 anyway.