I mentioned Tera and this is how they fixed clipping issues. It's one of the few things in that game that made me think "that's clever".
http://i.imgur.com/DRbdL.jpg
The character in the middle shows exactly what happens when a character is equipped with a piece that would normally clip with the hair mesh. Yes, the hair style changes to something else entirely but from a aesthetical standpoint, it makes sense.
