This doll is obviously trying to have it both ways. It uses a whole host of stereotypes to evoke the idea of an Indian princess. But with the blue hair and "magical" references, the manufacturer can claim she's from a mythical, multicultural tribe that includes everyone.
No sale on that point here. This is pure Native stereotyping. Dolls like this should be hounded from the marketplace.
For more on the subject, see The Americana Indian" and Dolls of Canada's North.