My daughter just turned 2 in Dec. and I have been having the same problem. Be carful because eating their hair can really cause stomach problems. We tried the short haircut with her but she could still pull her hair so we ended up just shaving it, and hopefully by the time it grows back she will be out of the habit!!!
sounds like an anxiety-induced habit. not to say that your child is necessarily more anxious than others- some suck their thumbs, some children twirl their hair, she may just eat her hair instead. if you're really worried mention it to the pediatrician, especially if she shows other signs of anxiety or other compulsive behaviors.. in the mean time, have you considered cutting her hair (a cute bob?) not being able to put her hair in her mouth for a while may break this habit before it becomes permanent.