I watched the video again and counted; he follows up a boom at least 9 times. You’ll notice there are several time where he starts following them up but Balrog doesn’t headbut. As he does here (and as you suggested) he does a backward sobat kick. Jumping back is not a bad option either. Sure, you lose some space, but Balrog has to lose his rush to close ground, and you get to push him back out with a boom when you land.
Why would you attack Balrog while he’s doing the headbut? It’s very easy to backfist him on reaction, especially with the added recovery time on the jab and strong headbuts. The spacing is not tough to get down; all you have to do is make sure you far enough away that his headbut cant reach you.
Right, Balrog still does have to close the space, but he can do that with one rush before it is possible for you to get out your next boom. This is almost as bad has not having a charge. As you said, you can sobat him, but he could always wait a tad, in which case you would have time to throw a boom. It’s another mixup game. However, you definatly do risk something when he jumps through. In order to make the guessing game in you favor, you need to follow up booms with backfists from time to time.
It’s extremely easy to headbutt through projectiles with Balrog. Balrog has full projectile invincibility all the way up (all the attacking frames) on his headbut. The one time the Balrog player screwed up the timing on his headbut,it was an extremely careless mistake on his part. He headbutted before Guile even threw a sonic boom. By the way, that sonic boom, and I believe every other sonic boom (disregarding ones after knockdowns or air resets) was of medium speed.
At the end of the day, the risks for using the strategy you suggested are essentailly the same as they would be for using Muteki’s strategy. However, the rewards using his strategy are much greater. Not only do you rack up some damage with backfists, but you win back some terrain as well. It’s not good to be in the corner =)
Edit: Btw, IrrespressibleGuile, that’s just something you’ll get better with. You might be getting grabbed because of Balrog’s superior grab range, so try flashkicking and see if that helps.