What's commonly used is liquid Rit Dye in Rose Pink (now called petal pink). You could use the powder... but the powder has a tendancy to stay gritty. I've dyed fabric with that stuff and have gotten dark pink dots on the fabric. It could potentially do the same to pony hair as well.
Basically, you put a few drops in a cup of water and brush it in with a toothbrush. That's pretty much the technique I use. Other people have used methods of spooning it on.
If you're using cool water it's not an issue of the dye getting on the pony, since it won't absorb. Just make sure you wipe it off.
But I would be careful with so-softs, as the flocking can absorb the dye.
To remove repinking from the hair, I've found a few things work:
- Bleach will remove it easily, but will leave the hair stinky and dry.
- I discovered sticking the pony in boiling water actually takes a good chunk of the dye out.
- Acetone takes it out.
- Rubbing Alcohol might take it out, but I haven't tried yet.