I thought I'd post this in case anyone finds it useful, as I thought she turned out really nice. I know I'm not the first one to do it, and I'm not claiming to have invented the technique. The basis for what I did was taken from the nice tutorial WingsofMasquerade provided for my website;
http://mlppreservationproject.com/misc.html#DreamBeautiesStart with a sad Dream Beauty (I also touched up her symbols):
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loginCut her hair as short as you can get it:
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loginThen use something pointy to push the hair into her body (I used surgical scissors):
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loginI had some fun with her hair color, so it doesn't exactly match the original:
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loginThe tail is easy enough. Estimate the size you need (not too big or it won't fit though), fold it over and tie it off with something that will fit into the tail hole (for some reason I didn't photograph this, but it's the same as making a tail for a regular pony). I used a twisty tie. It fit easily into the hole and was just large enough to keep the tail in place, as long as it's combed gently.
I've only ever used Dolly Hair. It splits easily into strands that make nice plugs. I wanted her to have a nice thick mane so I used three of these strands for each plug. I tied them off with thread them folded them over and wrapped Scotch tape around the end. Then cut off the extra tape and thread. This makes the "plug".
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loginThen using your pointy tool, push each plug between her neck beads.
Here she is!
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loginThe plugs hold well enough for curling and gentle combing.