Ben, even if arms are d’rabbonon (and I’m not certain that being das Yehudis means something can’t be d’Oraisa, although it certainly means that it’s not written in the passuk), other parts certainly are d’Oraisa, and if those are muttar in a bathhouse, so is hair. It is possible that the Gemara regarding Kimchis was not referring to every single occasion, but I believe that your assertion that the bathhouse would be worse than the home does not make sense. Anyhow, the d’Oraisa of hair only applies in a public place and is irrelevant in the bathhouse.
R’ Moshe and others clearly write that arms are assur despite any prevalent mode of dress, but again, whether or not that’s d’Oraisa doesn’t negate the fact that areas which are d’Oraisa may be uncovered in the bathhouse, and since there is a tzorech, hair is no worse.
Sam4321, I was referring to Geder Olam, but it’s clear in the M”B (75-10) as well.