I don't know about Dreadtooth dropping it, it was datamined. And when I read the "use", it sounds more like a social item.
I could imagine someone going in the cave with the mask on, and using the amulet on his group to make them scream.
Curiouser and curiouser. We must get to the bottom of this, Watson!
Just talked with a guildmate about it and he said that it could have something to do with the trash in front of the cave.
What he thinks is that you use the amulet on them and they flee and tear up the cave or something.