I just read thourough the articles on the web page and I believe that the head is none other than Connacht's enemy from the earlier age. Bungie took alot of their ideas from Glen Cook and this theory seems to agree with Cooks style of writing most.
Obviously the Leveler is a direct parrellel to the Dominator figure. A being that comes once an age with near god like powers. The same seems to be true of leveler since Balor was obviously very alive even without his body. It seems that Connacht(Balor) defeated the head and put him in his present form, and was at a loss for how to completely destroy him. Therefore, he buryied him in Connacht own capital where he couldn't cause to much trouble. Eventually Connachts absolute power or possibly the artifacts that he so eagerly sought corrupted him and turned him into Balor. As Balor is out conquering and warring his watch slips on the Head, or perphaps Soulblighter works a deal with the Head, and he is rescued. Now free to cause trouble he set a power base in the light as seen by the rebellion. And manipulates all of his own enemies into killing each, either leaving him in complete control or at least keep any of his foes from winning. There is no good in the Head, it is just simply evil using good to get back at other evil. It is really no different from the Dominator using the Circle to destroy his rogue Ten and the Lady. After Balor, most of the Nine, and all the other Fallen Lords are dead, he only has to worry about Soulblighter and possibly Alric.