[Hellboy]

It might be a range thing. I certainly haven't tested this exhaustively, but once I found a leader robust enough to stand on the front of the battle screen for more than a round, he did in fact cast the spell.

I suspect that the problem I am having is that if the leader holding the item is not in range, he falls back to a default behavior of "Stay behind troops", he then moves behind my archers, which means (in this particular battle), he remains out of range for the entire battle. With a little further testing it looks like there's a reasonable workaround in that you can order the leader to "hold or cast spells". The downside of this would be that you can only do this for 5 rounds, and if you're not in range by then, your leader will likely start to back track again. But at least in my limited test, this was not a problem, and the caster did stay in position unil the enemy undead came within range.

If I am correct in the above analysis, this is probably not a big deal (especially as there seems to be an easy workaround), but I'm not sure this is the ideal behavior for leaders w/o magic but scripted to cast item magic.