Ooh, "tactical genius". I like. Praise Isthen moar.
*ahem*
Anyway, I think Isthen is likely to have been a (minor) priest from another kingdom - the same one where Horace got his inherited title from, perhaps? - who got it into his head to go out and spread the faith of glorious civilization. And Horace is the only person who took him seriously.
The bandits might have been their first true trial by fire (the "larger city" funding the bandits might be the one north of Haun that was mentioned in the IC), and they were heading towards Haun to follow up on leads when they ran into a certain yuan-ti and warforged being attacked by zombies...
And now at least one of them keeps calling Isthen "Dragon", and he's not sure whether to be pleased or insulted.