BHAMH:
I don't know how common the problem is but my youngest son was the same way when he was little. I was lucky that he had not much hair, being very fair, and I could wash his hair with a face cloth. The good news is that he got over it at some point and now has no problem with wateron his face at all. He takes marathon showers, in fact, and loved to swim under water, with just a mask when he was 7 or 8.
If he can do the wetting of his hair himself, maybe he will feel more in control of the process, and less afraid of being hurt. I'm dredging this out of my memory, since I had forgotten about this problem we had until I read your letter. My son also preferred to bathe with his brother in the tub, in spite of the usual sibling squabbles. I also remember that when he was crawling, He had to be on a blanket on the lawn, as he was really freaked out by the texture of the grass under his hands, and would cry bitterly if he tried to leave the blanket. I use to have nearly every blanket in the house around the shady side of the place so he could be where his brother was playing. When he started to walk he was no longer worried by the grass,a nd would happily run over it in bare feet, so it was just the feel of the grass on his hands he was worried by.
I suspect if you are creative about working around this fear, he will eventually lose it, and you will suddenly, at some time in the future, stop and think "Oh yeah, he used to be afrraid of water on his head, now when did that all stop?"... Just like me.
Don't let it get you down, either because he will probably pick up on that and think there really is something to worry about.
Good luck, and my good wishes!
Shay