As you move I move.
So ....
So, you laugh. Actually, you deflect the attacking arm
The attack was a bait, so I pull it back across your deflection and cut you.
As you attempt to gain control, I change directions and stab.
I have either zoned out of your attack range or if you have moved with me after being cut, and while being stabbed you strike me, I am hiding my chin behind my shoulder.
usually with a palm heel to the point of the chin,
Usually is not always which you have stated here yourself.
but anywhere on the head will do.
While the egg shell concern for any strike to the head is something to be concerned with, I think depending upon this could be a problem. I never bet on anything 100%, I always expect everything I do to be countered and I am willing to react accordingly.
Ok let us assume you have me locked up. Now you have two hands on one. While it gives you strength on the weapon hand, I have my free hand to strike back. According to your statements if someone survived your assaults they would have a good chance to knock you out.
Now Like I said I do not think that anything is 100% effective, I think that having an open mind to the situation gives one more options to surviving then closing your mind. But that is my opinion.
or throw him which will destroy his elbow or put him in a position to be stomped.
The destruction of the elbow is not gaurenteed. I mean if one counters with a bent elbow and dropped center it can negate/counter this technique.
By Stomped, I assume Foot Stomped while you have two hands on their one and trying to turn them out which would negate the above strike I mentioned would be a counter. This is good, but understand that if they were looking for their counter strike earlier then they might be prepared here as well, and be ready to counter like I said.
As Arnisador stated, if this is done at full strength or speed to a person it can most definitely damage the person. But I do not bet on it being 100% effective.
This is pretty standard stuff advocated across the centuries. You find it in koryu jujutsu systems, in judo manuals from the turn of the century up to WW2 (and I've seen it in Marine WW2 training films), and among modern practitioners such as Hochheim. Such defenses also are staples in krav maga, with good reason: because they are effective.
Effective they are. 100% guarenteed they are not. To me it is not the art or lineage of where it comes from, but from the person(s) who is(are) executing the techniques.
I once met a corrections officer who did this in response to a shank attack, except instead of hitting the inmate in the head, he hit the guy in the chest. The force of the blow, combined with some leg action, drove the inmate to the ground with such force that he cracked his skull on the floor.
I myself have done lots of things with inexperienced attackers, with a Knife and empty hand and/or other weapons. Or programmed attackers. I have had people strike me only 3 times and drop their hands as that is all the ever practiced for. Instead of striking them in the head, I did palm heel strikes/pushes to the chest to knock him down.