Er, just did Khutit quest and my dragon Kracklepop, with one of the new dragon heads, has NO head at all in Khutit form ...
PIC: http://morrowind4kids.com/mw4kfiles/brash/headbug.jpg
Added after additional experiments: I never see the head. People who do not see me transform, do not see the head when I appear, but *do* see a head if I make the transformation directly in front of them (check with Tala and Dragor). If I portal away, change, portal back, they see no head.
Dragor also says I have some ridges missing.