While I'm all for long hair it would clip horrible to the point where I wouldn't use it. Even the ponytail I use clips trough my shield (and neck position part of armor) all the time.

And I don't think they will ever add TressFX or hairworks, better physics support because either servers will explode (remember Yoshi said servers will crash if they even added 1 more slot to the inventory) or the spaghetti code is holding it back (no doubt).
Other then that such settings in an MMO would be overkill, consoles wouldn't be able to use it and many PC wouldn't be able to handle it either so I don't see them working on a feature that maybe 5% of PC users would be able to actually use.
And before this they would actually need to get true multi core (to at the very least use 8) support and just a modern engine that's able to use the power of current gen CPU/GPU's ... I just don't see all of this happening.

^ I think that's the reason all the hairstyles are rather short.

But, there's actually a mod for longer hairstyles. You can google it, I'm pretty sure I'm not allowed to post link to mod websites.