1) Was the "No facial hair rule" ever actually a rule in the Mafia or is that just a myth started by Donnie Brasco?
Selwyn Raab, in his authoritative "The Five Families," says it was a rule that applied to all the Five Families, long before the Brasco affair.
Makes me wonder that Philip Testa may have been whacked because he had a mustache.

And what about Frank Cali?
In the last decades you see mobsters growing a mustache more often, so I'm wondering how much this rule still applies. It seems that it's more a code of conduct or behaviour and that higher ranking mobsters can pretty much do what they like.
What about Frank Cali? You've seen him with a mustache or facial hair?
In Italy, men with facial hair is seen as dirty and unkempt (unless you're a footballer lol). As far as the mafia goes, if you're sloppy with your hygiene, you're sloppy with everything. Still, it's more of a cultural thing. Most men in Italy don't have facial hair, mafia or not.