הוא באמת כזה מכוער?!
Isn't this type of phrase short for "...על הראש שלו", meaning that it could be interpreted correctly as "...on /his/ head" as well?
Since you already said לו, the word שלו is presupposed.
It is only because of English. Many other languages do not add it and say simply "on the head", say "na hlavě" in Czech.
Wouldn't this more literally be "a paper sack"?
It is, indeed, a diminutive of שק but used as "disposable bag" (plastic, paper etc)
Yesh lo sakit neyar al ha'rosh.
הוא כל כך מכוער.