Later episodes have the round, horned hat as one of the few available shapes for custom hats.

Like the girl is wearing something that looks like a medieval princess's hat, I think he's just supposed to wear a "viking" hat (the historically inaccurate but popular costume kind).

I'm pretty sure they just wanted :

_ No free hair because not enough polygons to make them look good (don't forget AC for Gamecube is really a slightly augmented N64 game)

_ designs that evoke "imaginative kids that love to play pretend" to you.

The boring choice would have been baseball cap, like any other cliche 90s kid character design.

I always thought it was a hat

Maybe the female character is half horse.

They're trying to brainwash your kids to worship Satan.

(/s)

There is this but I think it just raises more questions

Cowlicks? I can't remember what YT video explained a good reason for it.

Bottom kind of looks like cow ears.

I like to believe that his name is Logan or Patch and he has left superheroing behind for a simpler, quieter life.

Maybe the female has udders. 🤔