I forgot to note: this issue occurs in both 2.68 and the 1st release candidate for 2.69

I can't reproduce this without further steps. Please give more details on how to create this situation or (better) attach a simple test file that shows the problem.

Which renderer are you using (i guess Blender Internal?). What modifiers are there on the particle object and in what order? At some point it resets the hair to the initial state it seems, but without details it's not possible to investigate.

UPDATE: i suspect this is because the hair coordinates are local to their origin face. When enabling "use modifier stack" it can't properly map hair faces from editing/viewport to more higher subdiv faces in render and produces bogus result by using random hair transforms (see attached file, F12 to see messed up transforms).

In that case the best workaround is to ensure you use the same subdiv level for the hair emitter in edit and render. Still need a test file to confirm this ...

Lukas, it is possible to be a conflict between viewport and render settings indeed. It's being solved with upcoming DAG-mt branch merge. Well, at least it'll make it possible to distinguish whether hair need to use viewport or render settings without G.is_rendering hack (which i believe fails all over the place).