I think you should keep the tall hairgrass, but spread it a bit. Keep trimming it and it will fill in nicely. It's not that it's inappropriate- it's just a bit under developed at this early stage. I didn't notice it looking like algae at all. Are you conbining petrified wood and driftwood there for hardscape? I can't quite tell exactly from the pic. That would maybe be an awkward combination- but in this photo it looks as if it can work.