I still have a one-gallon hat, probably because I never equipped it. I ran away from a fluffy bunny; still had a one-gallon hat. Lost a fight; still had a one-gallon hat. Won a single fight, now have a two-gallon hat. I noticed this in the post-combat text:
I guess that makes it easier to track.
HTML:
<!--familiarmessage--><center><table><tr><td align=center valign=center><img src="/images/itemimages/cowboyhat.gif" width=30 height=30></td><td valign=center>Your hat gets bigger!</td></tr></table></center><!--familiarmessage-->
I guess that makes it easier to track.