In some passages, it seems pretty clear that Nietzsche’s “blond beast” is a lion. In others, Nietzsche is referring to the Aryan “conquering races.” Here are the passages with the first kind of blond beast:

At the center of all these noble races the beast of prey, the splendid blond beast avidly prowling around for spoil and victory; this hidden center needs release from time to time, the beast must out again, must return to the wild – Roman, Arabian, Germanic, Japanese nobility, Homeric heroes, Scandinavian Vikings – in this requirement they are all alike.

One may be quite justified in continuing to fear the blond beast at the core of all noble races and in being on one’s guard against it.

The above quotations are from the Genealogy of Morals, First Essay §11.

Another instance is in the Second Essay §17:

I used the word “state”: it is obvious who is meant by this – some pack of blond beasts of prey, a conqueror and master race which, organized for war and with the ability to organize, unhesitatingly lays its terrible claws upon a populace perhaps tremendously superior in numbers but still formless and nomad. That is after all how the “state” began on earth: I think that sentimentalism which would have it begin with a “contract” has been disposed of.

The point is that the civilization of the “noble races” of antiquity was a rather thin veneer under which the predatory nature of these peoples was concealed. It couldn’t be permanently concealed, and it occasionally expressed itself openly as an unrestrained will to conquer. This is the real origin of the state: it was an instrument of domination, not a mutual aid society as social contract theorists liked to imagine.

If nothing else, Nietzsche’s references to Arabian and Japanese nobility as exemplars of the blond beast make it clear that hair color is not what he had in mind.

On the other hand, it’s also clear that Nietzsche believed that there were literally blond “conquering races,” namely Aryans. This is from Essay One §5:

In the Latin word malus (which I place alongside μέλας [melas]) the common man could be designated as the dark-colored, above all as the dark-haired (“hic niger est”), as the pre-Aryan inhabitant of Italian soil, who through this color stood out most clearly from those who became dominant, the blonds, that is, the conquering races of Aryans.

And this, from the First Essay §11:

The deep and icy mistrust the German still arouses today whenever he gets into a position of power is an echo of that inextinguishable horror with which Europe observed for centuries that raging of the blond Germanic beast (although between the old Germanic tribes and us Germans there exists hardly a conceptual relationship, let alone one of blood).

So Nietzsche sometimes uses “blond beast” to refer to the leonine predatory character shared by all conquering races, and sometimes to refer to one specific conquering race, the Aryans. When used to refer to the latter, the figure indicates both its predatory character and its coloring – that is, Nietzsche uses “blond beast” both metaphorically and literally.

The larger issue lurking here, of course, concerns Nietzsche’s views on “breeding” or eugenics as a way of creating a new “master race,” and the relationship between his views and the racially motivated crimes of the Nazis.

Part of the difficulty of addressing this question is that Nietzsche wasn’t consistent. There are plenty of places where he speaks positively about literally breeding a new kind of human being (though I don’t recall him ever including hair color in a list of desired characteristics). He often disparages the potential for “racial mixing” in modern Europe as a factor in reducing the population to a “herd” (see Will to Power §864). But there are also passages in which Nietzsche speculates that the mixture of races and cultures that democracy is encouraging could produce new and interesting “hybrids” (see Beyond Good and Evil §242 and Will to Power §960).

One thing seems clear: Nietzsche was happy to entertain the possibility of eugenics and breeding. In principle, he couldn’t have had any moral qualms about it, since he had replaced moral evaluation with evaluation in terms of the will to power. The question of whether to “mix” or “purify” seems to have been a choice between means not ends. The end is the “enhancement of the type ‘man’” (Beyond Good and Evil §257), and whether this is to be achieved by racial mixing, racial purification, or some combination of the two is just a matter of efficacy.