ADDITIONAL UPDATE: (2nd hat): I added more photos of a second hat I knit up for myself (gray hat). All the images starting with the gray hat image shown still being work, are all the same hat and the same color; lighting just made it look different in a couple shots on the mannequin head. The one done for my niece came out so well, I wanted one for myself. The image with the pompom not showing with the model wearing glasses, is the true color of the yarn (green); the color is not the same in all the shots. Also, the yarn is for the second hat. I do not know the name, fiber or actual package / dye lot for the first (green) hat. The yarn for that hat came from my niece with no label or any kind of packaging to identify it, sorry. I like to know what it was too. While it did not feel soft to the touch, it knitted up with a very nice feel and drape. Almost like a linen or a blend of a natural fiber. It also can not be seen in the picture but the green (unknown) yarn also has a slight sheen to it. So it might have had some Rayon or Silk in it. Who knows. :-(
UPDATE: I thought I should put the update at the top and not the bottom to make sure it is read by anyone who may want to try this pattern. If at any point while doing the seed stitch (which is the main body of the hat), when you get to the decreases, it would more important to just keep following the pattern of stitches rather than the instructions if when you decrease by knitting 3 stitches together and you end up with either 2 knits stitches next to each other or two purl stitches next each other. At all times you basically will start with knit 1, purl 1 one row and the next row you start with a purl 1 knit 1 (purl the knits and knit the purls). I found this out the hard way and had to adjust for occasionally according in order to maintain texture of the pattern. See the close-up in the last image in the middle of the picture. There are knit stitch on top of each other (one row on top of another row). It should not look like that. It should look or the stitches below those stacks. It should look like the texture at the top of the picture at ALL times. keep this in mind as you decrease and shape the top of the hat. You are only decreasing stitches to shape the top. You will never change the texture of the fabric (how the stitches look).
I made a slight modification to the the head band area of the hat (see close-up photo). I was experimenting with different textured look for an unlabeled yarn my niece gave to knit some items for her. As with many yarn fibers, while the gauge may work, the fiber may not knit up the same so it took several tries to find the right pattern and/or design to knit her a scarf and later this hat using this particular yarn. While the final appearance, at first glance, was not that appealing to me and also look like it might have been too large, after trying it on…I was hooked. I love the feel, fit and comfort of the final design. I actually did not want to take it off. ha ha but I did make it for my niece (using her yarn) so…I will be soon be going through my own stash or buy more yarn to make another one of Karen’s great design for myself very, very soon. I had been looking for a nice slouch hat pattern for myself to make. I found some but never made any until now. I absolutely love, love this hat. I had plan on surprising my niece but was too excited and sent her a pictures of it. She loves it too. Many thanks to Karen for sharing this free pattern. I would not have been able to make it if it were not for free. I am permanently disabled and unable to work with a limited income. I hope some day to be able to afford a better quality of yarn to make myself one before the winter is over.

I should also point out two things:
First more crucial. The seed stitch which is use for the general texture of the hat is an easy stitch to do (you start with knit a stitch, purl a stitch on one row and then on the next row, you start with a purl stitch then knit stitch repeated per row). However, when working with a lot of stitch like this hat require, you REALLY have to pay attention, if you accidentally knit two stitches together Knit on one row and another knit above it on the next row (instead of a purl) or knit a purl above a purl, it will completely throw you off. This can also happen if you drop a stitch. It will throw off the count and you could still make the same mistake that way too. You have been warned. ;-) I already experience it and it was not fun trying to fix it.