Rhus aromatica 'Gro-Lo' is a shrub about 2/12 ft tall that spreads by rooting stems. It has good fall color and is perfect as a groundcover for hot dry areas. Keep in mind that if you use this type of groundcover, you won't be able to walk through the area. Another shrub that might work is Hypericum calycinum, about the same height and also a spreader.

If the area is not too steep, you might plant a mix of small trees and shrubs.

they just started a new forum called hillside gardening. please post there and maybe they can help you. they're needing some questions!!!!

I second the reccommendation for the hillside forum.
You can also try researching various low-growing grasses. I think some of them are adapted to clay soil.
Standard suggestions are ivy and vinca but I could never reccomend those in good conscience (ivy is particularly horrible). There might be some sedums that work for this as well.

Crown vetch might work. It grows fast, has deep roots (add nitrogen, I think), and has pink flowers.