Hmmm... well I wouldn't say it's quite working in our house yet!!  I'm still trying to teach Ella how the naughty corner works - a couple of times she's seemed to respond, last 2 times it did nothing.  I guess any kind of age-appropriate 'time out' is worth a shot though - If Ollie gets upset when you put him down after telling him a bit 'no', does that mean it's already working?  'cause it sounds like what you're doing already is right on the button - not nice hearing him have a scream, but at least him getting upset shows you that it's an effective discipline tool, IYKWIM.  And if he's left to sit there by himself and have a cry for a minute before he gets a cuddle and is shown how to be gentle with your hair, maybe it'll eventually get through to him?  Then again, I'm sure no expert!  I'm just feeling my way here too. 

sorry no advice, but I know how much it can hurt. Ella loves pulling my hair and she is a really strong little girl. For her it is more of a comfort thing as she tends to pull it more when she tired or hungry or really clingy...she pulls my hair and then puts in her mouth and start sucking her thumb (so not only does it hurt and my hair gets messed up, it all gets all wet).  Other times she just  does it, because she gets a reaction from me and thinks it is funny . I was hoping she might grow of it.......