UrbanTC,
Looks like a gall.
Oaks have many unique galls usually made by Cynipid gall wasps.
There are galls made by mites and midges as well.
Some galls are very woolly and have seed-like structures in them, like in your photo, where the wasp is developing.
The wool sower gall is very much like that, however, it is usually found in white oaks, but perhaps there is a similar species of wasp specific to red oaks.
There is a hedgehog gall that is made right on the leaf's main vein,like in your photo, and has orangish 'hairs' although generally more contained.
Maybe an entomologist can be more specific on the gall/wasp ID, but galls are usually not considered harmful to trees.
-Diane