I start by adding a dollop of frosting to the tops of my cupcakes. This is just so I get a nice, mounded look with the frosting. This layer can be messy since it's covered up in the next step.
Then, I pipe icing through a special decorating tip that I believe was intended for piping grass; it has a bunch of little holes so the red frosting comes out like fur. [A side note when making red frosting: I used 2 entire jars of concentrated "no taste" red frosting color to get this red frosting to look right! ] I start the "fur" around the outside of the cupcake and work inward, covering the entire surface.
Voila! Elmo heads! Or little shag carpet cupcakes (not sure of the occasion these would celebrate...) You can tell people that Elmo turned his back and serve them like this, or you can add the chocolate face parts on top of the fur. I think I'll add the faces.
And there he is! So cute. You can't help but smile. I like to use the chocolate to make the faces simply because I think it tastes better than fondant, but fondant would also work for these. La la la la, la la la la, Elmo's World...