This quick little video is handy for punching hair through the silicone head. I think this would work nicely with real hair or wool hair. Synthetic hair would be something you could test as well.
Also, here is a link to iStop Motion which I think is a very reasonable way to approach the animation end of this project. This is a powerful piece of software for a very reasonable price. If you are curious as to whether your camera is able to be tethered to effectively, check this link.
You can also use the Dragon Frame station in the 10th floor lab if you choose. It has a DSLR camera mounted on a stand which is tethered right to the software. There is also a technician that can help you if you have trouble with the software.
Start to think about your dialogues and begin to storyboard them if possible. This will give you a head start in planning so that when we get back from the break, you are ahead of the game. Good luck and happy puppet making!