I think most everyone has a "bad" habit that they pick up in the early years. Some are more tolerable than others. Be happy that you don't have a child who constantly picks at her nails to the point where they begin to bleed.
Does your daughter know she is chewing on her hair? If so, then I would defiantly say she is doing this more to get you riled up. It sounds like it really bothers you. Your daughter is 7 and very aware of what makes you tick and what doesn't. If that is the case I would tell her that you will cut her hair short if she continues to bite on her hair.
If she is not realizing that she is biting on her hair. I would give it a little while. She may just grow out of it. Don't outwardly show your daughter that it's bothering you that much. You may find that she will stop this habit right away if no one is noticing anymore.