Get some rope from a farm supply store and make wreaths out of them and decorate. You can make small ones for ornaments. You can also make heart shapes out of the rope. You could make garland with it too. Red bandana material tied on the branches would be cute too. Look in the children dept of Walmart or the dollar store for little horses to make ornaments out of. There are lots of possibilities!
The year before last, I did a "rustic" tree. It wasn't western, but I think you could use a lot of the same ideas and it was really cheap! I cut grapevine from outside and wrapped it around my tree along with wide strips of red burlap(which came from Wal-mart at $1.00/yard) I hung cheap red balls and cut real pine boughs to stick in my fake tree. Pine cones, artificial feathers, red ting ting, grapevine balls and birds nest from the craft section completed the look. It was GORGEOUS! I got so many complements on it! I think you could add old horse shoes and tie your Christmas balls with bandanas and twine, and it would be really cute!
Here's a cute idea for a western themed Christmas!
Of course the tree topper would be a cowboy hat. Nobody would be left guessing with that. A stick horse in the branches would be cute. Cactus ornaments, cow skulls, like that.