I really think you are on to something with this hair / dysphoria connection. I don't have body hair but I understand that is a huge dysphoria issue for many MtF.
I can relate to the feeling of anxiety and dread when my hair was cut short (a little below the shoulder) 20 years ago, before I ever though about trans issues. Sure in the back of my mind the thoughts were there but I was far too busy (and in denial) to address them. My girlfriend at the time had been hinting I needed a trim. I did need one, the ends were dead and it was looking unhealthy. WARNING: Do not let a girlfriend/friend near your hair with scissors especially if you both have had a few to drink! She said she was going to take off an inch, took 10 inches, and fast! Too fast to stop her! I lost all trust in her forever at that moment. I was in shock! For a long time. I felt exposed, I looked weird, felt awkward around people, looked horribly ugly. Every time I would run my hands thru my hair or brush it and it got to the end I could feel my heart drop. I even cried. Yes there was this true feeling of loss.
My hair has been long since I was brave enough to tell my grandmother "NO! I am not getting a haircut!" I think around age 10. She used to get us (brothers) a haircut every time we saw her, twice a month. "Lets go to the barber and get you guys a "Boys" haircut, that will be fun right!?" Those dreaded words, and EVERYTIME we visited we had to get a cut. A "boys" haircut back then was a buzz cut, I would cry before going and cry when getting buzzed. My grandma and brothers would call me names and laugh at me crying, saying "Why are you crying you wimp, sissy (add other derogatory terms), your hair can't feel pain its dead... bla bla bla " One day I finally said "Don't touch my f***ing hair ever again!" I think I even ran away for part of that day. Never again did I get a "boys" haircut.
Short hair has just never felt right to me. When people would ask why I had long hair I'd tell them, "Well, if it was meant to be short it would grow like that, same way my eyebrows do." No one ever had a comeback to that.
I had mentioned to my therapist that I felt like having long hair all these years has helped to lighten my dysphoria and made it somewhat bearable all this time. If I had been forced to cut my hair in the last 30 years I probably could not of even looked at myself and would not be able to touch my head... it would be devastating to me, unbearable.
When ever I mention cutting my hair short to anyone these days, they gasp in horror. They all say I would not be me without my hair and it would be too weird. Everyone except my dear old Grandma, when I visit her she still, every time asks when I am going to cut the long hair off, says I would be such a hansom man if I did. EVERY SINGLE TIME I VISIT. Like clockwork. I either respond by saying loudly "NEVER!" and then smiling and laughing or by speaking her exact words as she says them. I even use a whiny girl voice to mock her. hahahaha I tell her "just forget it" and then steer the conversation away from the hair.
So yes! I do believe hair is related to how we perceive and feel about ourselves and maybe a way many deal with dysphoria. I would go mad if mine were cut too. I once got in a fight with a huge guy at a party, he was shaving heads of people that had passed out. I was not asleep just chilling with my eyes shut and he tried to buzz my hair. I jumped up and took the clippers, started freaking out at him (I had gone mad), I was fast and he was startled. Thats when I learned that he had shaved a few other people at the party. I kicked the living ->-bleeped-<- out of him with the help of three bald drones. It felt like a scene from fight club. I left and the baldies were still kicking his ass. One was a friend from school, he had awesome long hair, he must been passed out hard because his eyebrows were shaved too. I felt so bad for him, at school the kids were relentless with the picking on. I would of lost my mind if I had been shaven.
-Jade