I too think that she should have real hair during all the sequences, but let's think about this practically: can you imagine how hard it might be to have real hair in a scene that should have "floating" hair. When you go into a pool or whatever, your hair floats and moves all over the area. So it is much easier to have it be plastic-y during these sequences. But when she is above water her hair is dry and it's ok that it's real hair and it's easier to control.
Although why Eric's hair and Ariel's hair isn't real during the wedding and Kiss the girl sequences is beyond me. I like all the little sea critters, but I wish they had the moray eels. And with regards to lack of water, that may be a practical issue as well. The tunnels back there were leaking when 2000 Leagues was in, and to have the little fishes blow streams of water could become a mildew issue down the road. Not saying they couldn't or shouldn't do it, just that may have been the issue/motivation.