Reb Moshe said sheitels are ok, because even thought they are designed to look like human hair, women can always tell the difference.
I have difficulty understanding how very pretty sheitels can be asur, wince we have a klal used in the gemara of im kein nasata devarecha lshiurin, meaning where are you going to draw the line. Who can certify that this sheitel is not over attractive, but this one is. It is impossible to have a halacha where there is no way to objectively define what is ok and what is not. In all areas we have rigid measurements, like 4 tefachim for a lulav, 40 seah for a mikvah, but a wishy washy or subjective measure can never work.
Even the synthetic sheitels of 25 years ago were better than many women’s own hair, yet nobody had a problem. This issue is not at all clear cut.