I am trying to remember a cartoon movie from the 80's or early 90's and all I can remember is that it was very trippy, and there was a gnome like creature that I think lived in a cave and had flames for hair or flames on the top of its head. It was very weird and trippy!

Might it have been 'Stanley's Magic Garden' 1994? It was about a troll living underground in central park, he had red spikey hair. He wasn't supposed to be scary though.