Flat panel detector (FPD) based cone-beam computed tomography (CT) has made tremendous progress in the last two decades, with many new and advanced medical and industrial applications keeping emerging from diagnostic imaging and image guidance for radiotherapy and interventional surgery. The current cone-beam CT (CBCT), however, is still suboptimal for head CT scan which requires a high standard of image quality. While the dual-layer FPD technology is under extensive development and is promising to further advance CBCT from qualitative anatomic imaging to quantitative dual-energy CT, its potential of enabling head CBCT applications has not yet been fullyinvestigated. The relatively moderate energy separation from the dual-layer FPD and the overall low signal level especially at the bottom-layer detector, could raise significant challenges in performing high-quality dual-energy material decomposition (MD). In this work, we propose a hybrid, physics and model guided, MD algorithm that attempts to fully use the detected x-ray signals and prior-knowledge behind head CBCT using dual-layer FPD. Firstly, a regular projection-domain MD is performed as initial results of our approach and for comparison as conventional method. Secondly, based on the combined projection, a dual-layer multi-material spectral correction (dMMSC) is applied to generate beam hardening free images. Thirdly, the dMMSC corrected projections are adopted as a physics-model based guidance to generate a hybrid MD. A set of physics experiments including fan-beam scan and cone-beam scan using a head phantom and a Gammex Multi-Energy CT phantom are conducted to validate our proposedapproach. The combined reconstruction could reduce noise by about 10% with no visible resolution degradation. The fan-beam studies on the Gammex phantom demonstrated an improved MD performance, with the averaged iodine quantification error for the 5-15 mg/ml iodine inserts reduced from about 5.6% to 3.0% by the hybrid method. On fan-beam scan of the head phantom, our proposed hybrid MD could significantly reduce the streak artifacts, with CT number nonuniformity (NU) in the selected regions of interest (ROIs) reduced from 23 Hounsfield Units (HU) to 4.2 HU, and the corresponding noise suppressed from 31 to 6.5 HU. For cone-beam scan, after scatter correction (SC) and cone-beam artifact reduction (CBAR), our approach can also significantly improve image quality, with CT number NU in the selected ROI reduced from 24.2 to 6.6 HU and the noise level suppressed from 22.1 to 8.2HU. Our proposed physics and model guided hybrid MD for dual-layer FPD based head CBCT can significantly improve the robustness of MD and suppress the low-signal artifact. This preliminary feasibility study also demonstrated that the dual-layer FPD is promising to enable head CBCT spectralimaging.