waiting4mashiach-
The modern wig is a new invention, Chazal could not ban it.
Where exactly are you getting this information from. The gemara talks about ??? ????? and btw the Yerushalmi in Kesubos says that a woman is allowed to go out wearing what some translate as a wig.
Popa-
Chazal say that hair of a married woman is ervah, she is not showing her hair. Now, I don’t see any extreme insensitivity to tznius involved in wearing a sheitel.
L’halacha I do not think there is any problem with sheitels, but I have a problem with your line of reasoning. If a woman’s hair is ervah, I don’t know why she should be allowed to wear a shaitel. Would it be proper for her to wear a shirt with a lifelike picture of her body on it? It’s not her body, it’s just a shirt! I suppose you will answer me that ain hochi nami the shirt would not be ‘ervah’, but it’s assur because it will cause hirhur, which is not so by the sheitel. In that case I don’t know why she should need a sheitel in the first place, because I think I can present a solid argument that there is room to say that anything which the chachomim called ‘ervah’ but to us does not cause hirhur, loses its din ervah. And to say that without the sheitel there is more hirur than with the beautiful, lifelike sheitel, is very ???? to me.
I do not think the ikkar requirement for women to cover their heads has anything to do with hair being ervah, but that is a different discussion.