Daas and Sam,
I feel a bit like a broken record. With respect to hair there are TWO dinim:
1. There is a chiyuv for married women to cover hair learnt out from a posuk in the Torah in the Gemara in Kesubos. It is doraisa according to most poskim. This chiyuv has NOTHING to do with Erva.
2. There is a separate Gemara in Berachos that says that a woman’s hair could be Erva. This is derived from a posuk in Shir Hashirim and is d’rabanan. It is also, according to the R’Moshe and the Aruch Hashulcan cited above, dependent on the norm in the frum society. Therefore if women violate the chiyuv in point 1, there won’t be any problem of saying krias shma from point 2.
According to most poskim, these two Gemaras are not connected at all.