In cycles I made a hair simulation with multi colored hair
How can I do this in blender internal? This is what I have so far:
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There are no material nodes needed. (Before cycles the material node were hardly ever used.)
The following steps assume you already have two materials on your object, one for the emitter and one for the particles.
With the material used for the hair active, go to the texture tab.
That's really all there is to it. The Strand mapping is the key.
A little bonus if you miss the thickness settings from cycles hair, then you will like the Strand section of the materials tab.
Here you can set the thickness of the root and tip, and the shape (all very similar to cycles counterpart). The one feature BI's hair has over cycles is you can specify the size in blender units instead of just pixels.