Kraft responds:
I've heard you can use Kool-Aid for all sorts of things, like dying your hair. Is this true?
While you may have heard about some alternate uses for Kool-Aid; since it's a food product, we recommend you use it as such.We do have many recipes that incorporate Kool-Aid in them, and encourage you to visit our site,
www.kraftfoods.com, to find out which ones interest you.~~
Given the ingredients (sugar, fructose, citric acid, calcium phosphate, sodium citrate, natrual flavor, ascorbic acid, Yellow 6, Yellow 6 lake, artificial flavor, titanium dioxide, Red 40 lake, BHA) it's only fit to use as a hair dye.
But, are kids using it to dye their hair? Uh, yeh.
http://tinyurl.com/3yw79mOne did a rainbow job: "My hair is currently 5 colors of kool aid it is blue, green, purple, orange, and red. It turned out great but I am afraid to see what happens when I wash it but I will let ya'll know later! Peace"
As to what it's doing to kids' insides.... there's lots of info linking artificial food colors/flavors to hyperactivity and health problems.