I tried something similar recently using max hair converted to a mesh and basically found the results too noisy for use in a normal map - you're having the same problem here I tihnk although it's not too bad on account of the hair being relatively short. I find normal mapping hair on a per-strand basis always looks a bit…
Because normals only capture normals, you don't really get a layered, self-shadowed, volumetric look, and what you do get is confined to the silhouette of the mesh. Here's a quick test with thicker fibres, rendered with BPR and then Zapplinked to the diffuse. I didn't spend too much time grooming as evidence by that…