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NEW INFORMATION
This is an abandoned mod. Please see my new version here: Dynamic Items for Everyone. It does everything this mod does, plus a whole lot more.
NPCs will automatically equip or unequip their hood/helmet depending on the situation. It does not effect the player or followers. It does not give items to NPCs; it only controls the headgear they already have.
Factors that control whether or not headgear is worn:
in combat
raining or snowing
vampire in sunlight
cold location (for example, cloudy weather in Winterhold, or inside of an ice cave)