Julie - yes, I'm holding one color in each hand, which was so much fun that I felt weird when I finally dropped one of the colors.
As for pattern, I'm using the basic hat construction from The Knitter's Handy Book of Patterns, and I made up the color scheme. For this yarn, I had a gauge of 4 st/in, so I cast on 92 st on a size 8 16" circ. I did 2x2 ribbing for the bottom 1 and 1/2" or so and then switched to st st. I'm getting close to the decrease rounds. I really hope this doesn't end up being too big, but so far it's fitting.