Hey Jeordanis - many thanks for taking a look. 
There's a little more to the problem perhpas - though I too may be missing something (it's been a while since I picked upo "hair" so getting my head back into it!) As far as I know - the moment you create hair on a object - the hair is generated as an instanced duplicate of the original object. (as you can see if you click right to the bottom of the stack - it's in BOLD text (ie. instanced). Being an instance is important if you want to deform the orginal object in some way for an animation for instance (pun intended) - either with bones - or with a morph target. Because the orginal object and it's fur are two oblects refereing to one another - the fur correctly deforms with the original object. If you break the instance link - the fur is now an isolated object and you can give it it;'s own material - BUT the drawback is that it won';t deform with the orignal object. damn.