The older child is still a baby himself! He hits and pulls hair because he is a baby. It isn't really jealousy yet. He would do the same if you'd brought home a puppy and not a child. You can't discipline him, he's too young to understand cause and effect relationships (If I hit, I will be put in a time out). You can redirect his behavior.
First, don't let him get too close to the baby unless you are right there to protect the baby. If he starts to hit, catch his hand in mid swing, and tell him "no. Hands are for nice touches". You use the same words over and over. Eventually when he is older he will know the rule. For now, though, after telling him the rule, you redirect his attention somewhere else. "Would you like to touch this toy?"
He may continue to hit and pull hair until he is nearly three years old. By then, he should be mature enough to know the rule, and accept the results of his behavior.
at 11:24 AM on Jun. 19, 2011