Does pheomelanin have a useful biological function?
I don't think that the role of pheomelanin is known yet. To produce larger amounts of it, you need mainly two conditions: A weak (or absent) MC1R signalling and the availibility of the amino acid cysteine. If MC1R signalling is strong, the preferred way goes into the direction of eumelanin. Its known for quite a while that pheomelanin produces reactive oxygen species which either directly cause DNA damage or do it indirectly by using up the cells storage of antioxidants. You can find more details in this review as well as links to a number of original papers.