In theory, we're doing it wrong.
In theory, a person with a beard already must still wear a fake beard to play a dwarf and a person with real sideburns must still wear fake sideburns to be a hobling.
Seattle has and continues to allow the males who play and are capable of it to grow the real thing because it's more immersive. Face it, the real thing looks real... the fake thing never really does at our level.
So, in theory, said person with a beard would have to make sure to enhance the other features of hobling-dom (allowing the sideburns to grow out longer than the rest of the facial hair, the bushy eyebrows, wearing the big stupid fake feet, etc...) or, shave it.
The other option is to strictly adhere to the book on this one. *shrug* Damned if you do, damned if you don't.