Since hats on dpns are not exactly something I have mastered, I decided to pull out my Knifty Knitter and try something. This is what I ended up with, after about 20 minutes. I think it works........
So, I couldn't stop at Christmas - I had to keep going. Now I have this:
I used 2 strands of Bernat Happy Holidays acrylic yarn held together as one and the blue Knifty Knitter loom for the Christmas hat. I used various yarn remnants from my stash for the other hats, but all were made using the blue Knifty Knitter round loom and 2 strands of worsted weight yarn held together as one. I've got another set in progress with different colors, but the same basic idea.
Step 1: Tie a slip knot and anchor yarn to the peg on the loom.
Step 2: E-wrap every peg.
Step 3: E-wrap every peg again, so that each peg has 2 loops on it.
Step 4: Knit off each peg, lifting the bottom loop over the top loop, working around the loom.
Step 5: Push the remaining loop down towards the bottom of the loom.
Step 6: E-wrap every peg again.
Repeat Steps 4-6 until the hat is about 4 inches long. Do not e-wrap the loom again, leave just one loop on every peg.
Step 1: Cut your working yarn leaving a 4-inch tail.
Step 2: Cut another piece of yarn about 9 inches long and thread it onto a yarn needle.
Step 3: Working around the loom, run the yarn needle from the bottom of the loom, through the loops remaining and pull the loops off the loom onto the working yarn. Do this one peg at a time, taking care not to twist your working yarn.
Step 4: Turn the hat inside out and pull the two ends of the working yarn tight. Tie to secure.
Step 5: Turn right side out and add a tassel or a pom-pom if you'd like.
This could work for larger jars too - the hat is pretty stretchy.