I use a re-root tool I bought on ebay and punch the hair in. I started out by sewing it in with 3 inch darning needles. It works well but slower compared to the re-root tool. As for paint, I use acrylic paint.
Yes, her stitches can be removed. I saw MHScreamQueen has a tutorial on youtube. Use nail polish remover. On the face I used a Q-tip and carefully removed it. You have to clean it with water afterwards. For the arms and legs, gently rub the remover over the limbs with a cotton ball. If you have one of those really fine nail files (the block) you can smooth out the skin.
For hair I buy from dollyhair.com and restoredoll.com.