In this screen are 3 other examples.  In the left screen is a similar hair strip where the edge goes far down beyond, it seems fine.  The second has a decorated strip closer to the underlying fabric, no problem.  The third I modified the second to curl out the hair at the bottom. The moment it got enough distance, it wouldn't work properly in the cloth sim any more.

Now, if I make the distance greater anywhere else, not close to a edge, the whole thing works just fine. It doesn't seem to get problematic later on in the sim either, even if layers overlap and such. As long as it "connects" right at the beginning of the sim, it works fine later.

Unless there's a workaround for this, the only way to do decorated strips is to keep them close enough to the underlying fabric, and if waves are needed, make sure the edges don't lift up too much.. Could always make it curl out towards the bottom, then connect back again, closer, and use trans maps. It's a bit more complicated, but would probably work.