I have experimented a bit and I get fairly good result when applying following for the hair material:

• Transparency edge: 0.1
• Transparancy falloff: 0.1
• Diffuse Color->Color Texture->Image mapped="Alpha"
  and following in Render Options:
• Check Smooth Polygons

Mind you, you can still see the sharp edges (the squares in the mesh on the top of the head) if you zoom too near, but from a distance (if you can see the whole Victoria figure) the edges are smooth.

I guess you could drop a mail to Koz with the screen shots and ask for his advice. I think if he could update the wave hair geometry with smoother edges the problem could be solved.