Some more on the topic of hair and stem cells in the papers and publicity materials linked below. Note that first generation stem cell transplantation in most cases appears to work largely through signaling. The transplanted cells don't stick around for long, but suppress inflammation and oxidative stress, encourage regeneration, etc, by changing the behavior of native cells. Oxidative stress reduction seems a plausible mechanism for reversing graying to some degree as a result of stem cell transplants.
http://www.fasebj.org/content/20/9/1567.abstract
Oxidative stress is generated by a multitude of environmental and endogenous challenges such as radiation, inflammation, or psychoemotional stress. It also speeds the aging process. Graying is a prominent but little understood feature of aging. Intriguingly, the continuous melanin synthesis in the growing (anagen) hair follicle generates high oxidative stress. We therefore hypothesize that hair bulb melanocytes are especially susceptible to free radical-induced aging.
http://www.ncbi.nlm.nih.gov/pubmed/18573711
"Hair graying is one of the prototypical signs of human aging, but its mechanism is largely unknown. To elucidate the mechanism of hair graying, we investigated gene expression related to melanogenesis in human hair. The key molecules in melanogenesis, microphthalmia-associated transcription factor-M (MITF-M), Sox10, Pax3, tyrosine related protein-1 (TRP-1), and tyrosinase, were absent or greatly reduced in the bulbs of white hair compared to black hair. Melanocyte stem cells (MSCs) or melanocytes express markers for neural crest cells, Sox10, Pax3, and MITF-M. Taken together, our data suggest that hair graying is caused by defective migration of MSCs into the bulb area of hair."
http://www.eurekalert.org/pub_releases/2013-05/foas-gha05031...
"People who are going gray develop massive oxidative stress via accumulation of hydrogen peroxide in the hair follicle, which causes our hair to bleach itself from the inside out. The build up of hydrogen peroxide was caused by a reduction of an enzyme that breaks up hydrogen peroxide into water and oxygen (catalase). Hair follicles could not repair the damage caused by the hydrogen peroxide because of low levels of enzymes that normally serve this function (MSR A and B). Further complicating matters, the high levels of hydrogen peroxide and low levels of MSR A and B, disrupt the formation of an enzyme (tyrosinase) that leads to the production of melanin in hair follicles. Melanin is the pigment responsible for hair color, skin color, and eye color. The report shows that this massive accumulation of hydrogen peroxide can be remedied with a proprietary treatment developed by the researchers described as a topical, UVB-activated compound called PC-KUS (a modified pseudocatalase). What's more, the study also shows that the same treatment works for the skin condition, vitiligo."