More on exuberant invertebrate hair
While I haven't had time to get into this in depth yet, I found a source that confirms invertebrate "hair" is nothing at all like vertebrate hair/fur, except in outward appearance: "1) The collection or mass of filaments growing from the skin of an animal, and forming a covering for a part of the head or for any part or the whole of the body. 2) One the (sic) above-mentioned filaments, consisting, in invertebrate animals, of a long, tubular part which is free and flexible, and a bulbous root imbedded in the skin...4) A slender outgrowth from the chitinous cuticle of insects, spiders, crustaceans, and other invertebrates. Such hairs are totally unlike those of vertebrates in structure, composition, and mode of growth."
So it looks like my previous concept of hair was a little too narrow, and it actually means any tubular filament with a root that projects from the external layer of the organism. That caterpillar's hair sure did look like vertebrate hair, though.