Ask her why she doesn't want to have curly hair anymore. Is she getting teased? If so, then having no hair is going to be puishment enough because she is going to get it even worse. If not, then you can always do something creative like make little gift baskets for little girls with cancer that have no choice but to lose their hair and maybe she will appreciate hers more. I don't know if punishment is appropriate even thought the behavior is not simply because you might be dealing with self esteem issues.
As RockRose says, we all did it. Why get so mad? If she's upset over having curls, you'd be a lot better off sympathetically trying to help her (while all the time making the flat iron look like a terrific nuisance and showing how boring it is to fuss with it) than getting angry and talking punishment. All you are showing her is that if she ever wants to get at you, the only thing she needs to do is mess with her hair.
As for "too old to be demonstrating this behavior," think about it. She's just getting to the age where girls mess with their hair ALL THE TIME. She sounds right on schedule to me. Wait until she's a teenager and dyes it blue.
Are there any kids who don't - at one point - have a self-inflicted hair cut?
My sister did worse - she cut the neighbor girl's beautiful long blonde locks off just below the ears.
It was awful. My mom had to take the girl home and apologize. ;D
Everyone does this, giann. It's not a big deal - she'll learn not to do it because she now looks silly.