Glitter would look great!
Kids have fun decorating the pony. The flowers and ribbons Blondie is wearing were attached to little hair clips; I put double-stick tape on a bag full of big plastic jewels and the kids got to stick them on her harness and halter ("they won't stick to her hair, so no, don't put them on her.")
We've put temporary hair color on her too, but I'd be afraid to let kids do that (maybe tempera?). Here she is as "the Easter Pony" (her tail seems to have slipped a bit)
Wishing Thing 2 a happy birthday, and hoping that everybody gets to make some happy memories!