The Priest of Handola shows up in the first mission on the Isle of the Four Winds (second continent). When you liberate his temple, a random event decides whether he is a) dead (then you get gold from the temple), b) alive (then he joins you) or c) alive and generous (then he gives you an amulet). I always hope to get the amulet, personally, because if you get him you can't get Dreggo (another hero) later. Either way both become obsolete towards the end of the game, though the PoH does have a nice 'bless' ability that makes your troops a little bit more resilient.
Personally I never liked him much - he's a bit odd and I have a hard time imagining him in a fight. We don't learn more about Handola either, so for all we know he is the 'God of Not Wearing Pants' (a very popular practice in Aer).
Artwork from the Strategic Simulations DOS game Fantasy General, I'm merely uploading it 'cos it's not available anywhere that I know of and it'd be a shame for such fine artwork from an era where so much love was put into video games to go to waste.