The Kobold Priest spawns in the middle room
of the royals area. Two other kobolds besides the Priest and his PH also spawn there. The PH/Priest spawn point is in the middle of the two auxiliary kobolds.
The Priest hits for 97, and frequently casts Wrath, as well as Superior Healing. I have yet to see him complete heal himself or any other kobold. And like some other posts indicate, he will heal kobolds in neighboring royals rooms.
After 5 kills, he dropped the Carnal Pauldrons four times, and the Mithril Breastplate only once. He also dropped a Fine Steel Great Staff twice.