Yes, that is right. "Sonst " can mean "at other times" as well as "in other places"
So she could even paint her entire hair blue - by mistake, or in order to have a change, and you still could say: "Sonst ist ihr Haar gelb", which in that case would mean "Usually her hair is yellow."
In your example of the big blue streak it could just as well mean "Everywhere else her hair is still yellow."
Besides the great Irish poet Yeats (noted by Soglio), I know of only one other Colossus of 20th century arts, culture and refinement that referred to "yellow hair." I give you, the archetypal US Southern Rock band Lynyrd Skynrd:
He said, "Hey there fellow / With the hair colored yellow / Watcha tryin' to prove? / 'Cause that's my woman there / And I'm a man who cares / And this might be all for you." [Gimme Three Steps]
Note also that Lynyrd Skynrd was inducted into the Rock and Roll Hall of Fame in 2006, the very same year as Blondie. Coincidence? I think not.
"Ihre Haare" and "Ihr Haar" are both okay. At least together with "gelb" which is a bit unusual for hairs. If it were something elegant like "golden", the Haar-version would sound slightly better:
"Sie kämmte ihr goldenes Haar."
"gelb" as opposed to "blond" suggests some ugly loud colour - so with gelb you would rather say: "Sie kämmte ihre gelben Haare"
"Haare" is just more technical and "Haar" is more aesthetic.
The Daily German has a good explanation: https://yourdailygerman.wordpress.com/2013/06/11/meaning-sonst/