Dullahan has over 10,000 HP and unlimited PP. The only way to defeat him is by summoning. He recovers 200 HP each turn and can absorb your HP. Bring out three Eclipses and three Catastrophes and that should finish him. If he still is not dead, power up the party member who has the Sol Blade with a few Impacts, then deliver the final blow. Be extremely careful of the Djinn Blast.