I often toyed with the idea that the Head was an ancient ally of the dwarves. And thus the lunacy begins.
In "A long awaited party" the dwarves seem to know exactly what happens despite being thousands of miles away. Now although the dwarves have knowledge and skill of magical items such as the Tain and the Worldknots they don't seem to have any magical powers themselves. So I think its safe to rule out that they used their own magic to know what happened. I also think the idea of them having portals in their packs can also be ruled out ;)
Now we know the Head has some sort of telepathic powers. He is able to tell the Nine that Alric was captured. He could easily have been the one to communicate between the seperated groups of dwarves.
Why? (Lunacy thickens) He became an ally of the dwarves when he was sent by Connacht to be ambassador to the dwarves. As Doom said, Connacht probably wanted to get as many allies as he could. He probably sent generals to various races as ambassadors. We know the Trow had great respect for the Deceiver, perhaps because of how well he spoke to them as ambassador. The Head could have been sent to get the dwarves to ally with Connacht, and in the process become their comrade.
After Connacht became Balor and allied with the ghols, he knew the dwarves would be a gainst him. So he attacked the Head, whom he knew to chum it up with the dwarves, and defeated him.
All the Head's machinations could have been simply to aid the dwarves. After all, who benefits most from the fall of Balor. The dwarves do, regaining their homeland and destroying the ghol's godhead.
Perhaps I am wrong. In fact, I probably am wrong. But it's best to consider all the possibilities rather than none.
