Assuming you mean the
Sword of Injustice (which matches your description) and not the
Infernal Sword (which does not), the following apply:
1) Units with no priest levels will not benefit from the +1 priest level. This is true in general for magic path boosters (e.g. blood stones don't grant a pathless commander 1E.)
2) The wielder can still cast the spell from the sword despite having no priest levels.
3) +1 priest level can be enormously beneficial if e.g. going from 2H to 3H (get battlefield wide blessing + smite). 3H to 4H lets you definitively site search for all holy sites (very minor benefit) and gives the ability to cast level 4 priest spells (e.g.
Fanaticism) as well as making banishment more effective.
The Infernal Sword, on the other hand, is a tool to try to banish SCs to Inferno.
Of course, if you're a NINJA you don't need swords like these to be dangerous...