Rob might be on to something here. I don't think you've mentioned any symptoms yet that a faulty rad cap couldn't cause. If it IS the headgasket, you'll want to replace your rad cap afterwards anyway, so you might as well pick one up. The fact that it comes out the overflow is a bit unsettling though.

I hope you get it sorted out. If you're unsure about the pellets, there's a product called Irontite that a lot of guys swear by (and a lot of guys have used to seal headgasket leaks).