There's nothing wrong with the head, and essentially there's no part you can't use as a head.
However, there's one major issue. The Head was assigned to a helper bone rather than an actual bone, which means it won't work and in some cases not even show up in-game.
I fixed it. Next time, you convert the .mdx file into an .mdl file, and check out the matrices of an object you've added, and assign it to the correct bone.
Finding the correct bone might be tricky, but if you search for "Head" (in this case), it'll show you the helper bone for head (in some models), remember it's objectID, then search for the appropriate bone that has the head helper bone's objectid as parent. Sound tricky? It's not, when you're used to it.
Here's the fixed model, it should work just fine in-game.
Good luck!