As indicated above, I've always had the TrackIR X, Y, Z axis disabled and I find head tracking almost impossible to use, so I find this intriguing that some people are able to play with it on in this configuration. Again, the fact that the HUD moves with your head and that the aiming reticule does not reflect your true aiming position with your head not in the centre position means that it just can't function correctly.
The only thing I can conclude is that in order to get around the broken nature of head tracking on-foot, you must be playing with a TrackIR configured dead zone and keeping your real head fairly centred in order for aiming to work. Perhaps could you check whether you have a dead zone configured in TrackIR? As stated in my OP, I find a deadzone not to be a satisfactory option.