Minor character success story

Hey. I was working on the plot for Felaryan Odyssey and this guy came up as a minor character. He won't be appearing for some time in the story but I liked him so much I decided to post him here. Please let me know what you think!

Mage Councillor D’Arma – A short, twitchy elf, D’Arma is the headmaster of the Isolon University of magic and a Ps’isol magiocrat. He usually has his long green hair tied back and wears plain purple robes. His skin is pale from years of studying ancient magical texts by candlelight in darkened rooms and his large brown eyes flit from one perceived threat to another. D’Arma is an exceptionally skilled mage, arguably one of the most powerful magicians in Negav and perhaps even on all of Felarya, though this is largely due to his headband, which is rolled psycheuranium wrapped around a psierin gemstone at the front. While this makes him a powerful wizard, it also makes him dangerously unstable. His running of the University is somewhat haphazard because of his tendency to flee to one of his many safe houses whenever he hears a loud noise, but all of the numerous attempts by his fellow magiocrats to ‘remove’ him from his position have ended in failure thanks to his rampant paranoia and magical skills. Fortunately, his overworked aides manage to keep the University going, turning out skilled new mages. If there are a few strange rules, like don’t wear red on Thursdays and stay at least six feet away from Headmaster D’Arma at all times, then so what?

Few simple questions:

1. Why would the magiocrats have someone like him among their number?
   The only explanation I can think of is that someone is keeping him there in order to use him.
   
2. Why would the magiocrats let him run the Uni?
   They must know he's unstable and they certainly wouldn't want someone like that running their university. There are some powerful things in there, things that nobody would want in the hands of a powerful, unstable mage.

When creating a character of high power and position, you must put a high amount of development into them, otherwise they seen contrived or 2 Dimensional.

I probably should have elaborated - he got his paranoia headband after he became headmaster, and after he joined the magiocrats. I'm thinking he used his position as headmaster to get a hold of the psycheuranium and the psierin gem to make it, and then once he had it on he became convinced that taking it off would leave him exposed. He's still got grandmaster-levels of wizardry, but with the headband he's even more powerful. Of course, he mostly uses said power to maintain illusions to confuse any would be assassins and to immolate any student who looks at him funny. Also, I can't really see him going anywhere unless he is surrounded by four or five large steam golems.