Here's a demonstration of what Blender particle system can do.

I'm using an object, shaped into hair as template for the particle system,for Second life use it must be transformed to mesh via modifier, have an own UV map (placed at one spot for all the "fur"), must have weight maps copied from the mesh below and tweaked, also I've somehow managed to activate specular pattern so in SL grid it kind of reflects the nearby lightning environment.

I also thought the vertices count will be a problem but that can also be reduced by decimate modifier in blender, so around 100.000-120.000 it's allright, except for waiting longer time during upload.

Avatar complexity has raised from 17K (basic model) to 48K which is pretty good and satisfying. (most complex avatars have 330K+)