I've had the same issue with a horse I've been riding (she's been trail ridden all her life, so basics of movement were pretty foreign to her). You've danced around this idea already, but I just wanted to add to it:
Get the impulsion and forward movement first, and then work on the headset. You're right, you do need to build up those muscles first, but start with the hind end and back. I did some exercises with this mare and after a while she started bringing her down naturally.
I saw a clinic at Equine Affaire with top dressage trainer Pam Goodrich in which she was using transitions to improve impulsion. She was using immediate walk-trot-walk and walk-canter-walk transitions (as soon as the horse does a few good strides of one gait, transition to the next for just a few good strides, so on and so forth). I tried it and it was incredibly effective as it encouraged her to stretch under with her back legs, round through her back and neck, and ultimately bring her head down and nose in.
I wrote two more detailed blog posts about this, so I'll just give you the links and not rehash the whole thing here.
Using impulsion to encourage natural headset: http://regardinghorses.com/2008/01/1...rom-her-heels/
The transitions exercise to improve impulsion: http://regardinghorses.com/2008/01/1...ses-impulsion/