M., I think you've got the right idea --> finding a transitional object that includes a characteristic that closely resembles your hair. There are some really good, soft fabrics that he might find soothing (if cut and sewn into long strands!) such as minkee or a supersoft microfleece. Or a doll w/ realistic hair sounds good to me, too. As far as what others think... your sleep is more important than what others think about your son's lovey, in my opinion (hehe, you can disregard what I think too, if it doesn't work for you)!
Have you read Pantley's "No Cry Sleep Solution for Toddlers and Preschoolers" or West's "Good Night, Sleep Tight" book? Both seem like they'd be very appropriate to the age/stage of your son, and sometimes in the middle of the night what we parents need most is a pre-determined plan (decided on by us, not necessarily what a sleep expert recommends - you can pick and choose what you want to incorporate into your plan) to use so that we don't have to "figure it out on the fly" when we're groggy and desperate for more sleep. I do think it's true that consistency is key (given the child is having a normal, healthy day), so if you come up with a plan that you like, and then you and your partner both consistently give that unified, loving message to your son, he will likely be sleeping well within a month or so. You don't have to do "cry it out" and you don't have to have it be 100% tear free, either. Find what works for all of you, don't hesitate to get creative - a really sweet friend of mine who I think is a great mom actually wrote up a little script w/ a Sharpie pen that she posted on the door to her toddler son's room, and she would just lovingly, genuinely recite that script when doing sleep routine and helping her son learn to sleep on his own. She told me about this, almost as if she was embarassed, and I was quick to tell her how clever I though it was. So, don't hesitate to get creative. :)
By the way, I think it's wonderful that you are trying to maintain balance in your family, recognizing that you need more/better sleep and working towards that while also trying to make it a smooth, respectful, loving transition for your son. I know you will figure out an approach that will work best for all of you, and your idea for a lovey that simulates your hair seems like a great first step. Best of luck to you!