That was just a half-assed hack in Max for a laugh. Could someone do everything you want? Possibly. Will I? No. I don't have the time, nor the inclination, not to mention that it would require scripting and dialogue changes, etc. that are outside my ballpark.
However, if someone else wants to mess around with the idea (dancing or not), I will provide some files to get started on allowing visible armour on Kreia. Because the head was never designed to work with anything other than the Kreia body mesh, it doesn't line up properly with the necks of armour/clothes/robes like normal player/NPC heads do. Additionally, the hair on the back is only a single plane of polys, meaning it suffers from backface issues when seen from the front. It requires some additional polys with normals facing the front (probably easiest to mirror and offset the existing ones). At the moment the 2DA is set to just use the existing body models, so gimped Kreia gets her hand back (although I left the equip restriction in place). Ideally you'd want to create a full set of new body models with the hand chopped off, plus underwear models would require custom skin tones. Finally, I only did a quick test to prove the concept works and take some screenshots, so I have no idea what sort of issues doing this might cause. it would require pretty thorough testing throughout the game.
The following is intended as a modder's resource, not for use by end-users. It is experimental and untested. Use at your own risk. You have been warned.
<DEPRECIATED - RELEASED ON DEADLY STREAM, SEE LINK BELOW>
It includes the following: A modified version of p_kreiah which I gather is unused in the vanilla game. It only has the pony tails and the front of the hair, no top or back. I deleted the existing partial hair and then added in a full set of hair excised from the standard full body Kreia model. A modified version of p_kreiabb which has the included head deleted. This can act as the standard clothes model. Put together as a TSLPatcher setup with appropriately modified 2DA entries. Appearance.2da switches the two main party appearances (gimped and non-gimped) from full body model to using the custom head with standard body models. Heads.2da adds in a row for the new head. Note that the gimped row in appearance.2da will need to be changed if using modified 1-handed body models, as I suggested above.
Now released in a (hopefully) player-friendly version at DS - http://deadlystream.com/forum/files/...e-body-models/