I use regular craft tacky glue to reattach the heads. Namely, if the pony is sold and a collector wants to check inside for whatever reason... the glue is easily removed by some hot water.
As for paint, acrylics work fine. Many people (myself included) use cheaper craft paint with decent results on ponies. It's a combination between ingenuity, tools and skill/practice. If you know what you're doing, you can do an excellent job with cheaper materials and tools. Then again, if someone is entirely new, even the best materials will not make up for practice. :3
I use... small sable brushes for my painting as they tend to be more affordable when they are small and leave less brush strokes. I use thin coats, and also mix my acrlyics with a good shiny clear coat so it has a bit of factory sheen to it.
Also holding your pinky to the surface of whatever you're painting and go slowly and carefully helps to steady your hand. :3