I dont think Balor had a light streak.
The reason he did'nt use the Myrks is simply because he hated them, and had no access to them. I find it strange that SB being Connachants luitenant did'nt also hate them so much as not to use them, but he is however a very good general and tactician.
I don't think the head is Balors at all, it claims to be one of Connachants luitenants, perhaps it was beheaded by the previous leveler before Connachant destroyed that leveler, it is therefor an enemy of the leveler and so an enemy of Balor (because he is the leveller), as it says it is .
It could not have become a fallen lord, like Damas became SB, because it was lost and had no body.
The reason that Alric suspects the head is that since Balors other luitenants and allies became fallen lords it wold be easy for Alric to be suspicios, especially after he was captured.