The rules in wrestling are mainly there for the safety of the ladies, but ultimately the women themselves decide what is allowed. . If women are in mutual headlocks and one is suffering more, to get free, and I've seen this in many matches both live and recorded, the instinct is to grab hair to pull the head back. At this point it would be reasonable to complain that she is being held by the hair. What seems to be the norm is for the lady to retaliate. Now two women in each other's hair have perhaps inadvertently agreed it is allowed. Hair pulling in a wrestling match is gain control.
Like Bear I also think it makes for a more intense match. It is the most feminine of traits.