Well I finally managed to get the earrings to line up.
The problem is as soon as I change the shape of the face the earring goes out of position.
I tried each individual morph and it looks like Volition have messed up the morph target file (cmorph_pc) as the head morphs have no relation to the earring morphs. i.e. the earlobe goes down and the earring moves up. Unfortunately without knowing the format of the morph file I can't fix the problem. I've tried using the male version of the earrings (as they work OK) but it looks like the male head has a different set of morph targets (or they are ordered differently) to the female head. It could be that Volition accidentally targeted the male head for the female earrings.
So no fix for the Morningstar earrings unless Volition fixes them.
Take a look at the hex-editing that's being done on say Shaundi's model. Apparently when they came up with the 'whole-mesh npc' thing, they didn't bother making the earrings part of the head, but part of the body.
I'm going to guess they just grabbed stuff an tossed it on, and never cared to fix it. I mean, the textures already show they just slapped them in and didn't bother to check...
Not having the DLC pack, however, and having no plan to ever get it.. what's the problem with the earrings? Do they float beside the head or something?