Council Quests
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Prepare for fights: Defeat Moriendor (I used Energy Cage, cursed him with Survivor's Curse and then Elemental Hail). He's strong and can cast Hell Spikes. Freezing him works also. He will run away, just follow him and you'll find the room with the Axe, take it. Nope, don't return now, you've still got to get the letter in room 3. This one reveals Gregor's treachery and is important for the Dwarven King.
Take Axe and letter to the King and you will get a reward: A tip where the Dragon Armour is. If you have this forged with the Dragonheart gem (is in the Abandoned Imp Castle, 2nd warrior guild quest), the King will reward you with the Dragon Helmet as soon as you have showed this to him.
Version 1.0034 requires the letter only for these speech options. If you're playing version 1.0029, you need axe and letter to trigger this.
After that, return to Eolus, report and gather him for the Council Hall.
Well, this Easter Bunny has no chance, hm? Used Polymorph on him. I chased him into the black area between 2 rooms, defeated him and then a long cut scene came (a bunny is slow), where M. went back to give orders to hold me for a while. Even in the Stone Axe room he remained a bunny and squeaked his orders before he vanished.