The description of the Pardoner's hair forms part of his overall depiction as effeminate. There are strong hints that he is homosexual or possibly even a eunuch. The poet suggests that he and the Summoner are lovers. Chaucer has already said of the Summoner:
And hot he was and lecherous as a sparrow. (l. 626)
The Pardoner is then introduced as the lecherous Summoner's friend:
With him there rode a gentle Pardoner
Of Rouncival, his friend and his compeer
That straight was comèn from the court of Rome.
Full loud he sang "Come hither love to me."
This Summoner bore to him a stiff burdoun. (ll. 669–674)
The stiff burdoun is the bass refrain of the song. But in addition, bourdon can also mean pilgrim's staff. The implications of the Summoner bearing a stiff staff to the Pardoner while they sing a love duet are obvious.
The Pardoner, like the Summoner, is also linked to promiscuity. His eyes are said to be like a hare's, and his voice small as a goat's (ll. 684, 688). Both those animals were, and still are, emblems of lechery. However, Chaucer also indicates that the Pardoner is less than a man:
No beard had he nor never should he have;
As smooth it was as it were late y-shave.
I trow he were a gelding or a mare. (ll. 689–691)
The Pardoner's small voice, his inability to grow a beard, and his being either castrated (gelding) or female (mare), all mark him as effeminate. The way he wears his hair fits this overall picture. He lets his smooth blond locks grow out long and arranges them in strands about his head and shoulders. He wears a cap rather than a hood in order to show off his hair better, despite the fact that it is thinning. Chaucer uses the Pardoner's hairstyle to depict his personal vanity and lack of self-awareness. The Pardoner's hair thus is used to associate him with negative stereotypes of femininity and/or homosexuality.