At one time, I had the same problem of hair intersecting the body. But I soon determined that most dynamic hair was designed for still poses and not animation. By that I mean, either the hair already intersected the body at zero pose, or that there were too many hairs and vertices in its makeup. So I made my own hair, making sure that it did not intersect the body at zero pose. I also made it in layers, using half the amount of hairs and vertices that seems to be the norm. I deliberately made the hair waist-length and ran the simulation with collision detection on for the appropriate body parts, and it worked---no hair intersected the body in my dance sequence-animation. I wish I had some way to show you my little animation. Renderosity does not have a place for animators to show their work, and I don't have my own web site. But I give you my word that it does work and it works quite well.