They make decent second wave troops, starting the game disguised as something innocuous then revealing themselves on a seemingly weak flank.
Holo2 allows a variety of tricks, the most basic of which is using level one to make your knight appear like a lowly fusilier or other unimposing support model until it strikes.
When taken as your Lieutenant, hiding the knight as something weak which can't possibly be a Lieutenant can trick your opponent into wasting resources assassinating a lone decoy fusilier.
You can combine levels one and two, deploying as three identical troops to hide empty slots in a Combat Group. Unfortunately plausible options are limited to pretty much just standard fusiliers, and it's revealed on your first turn that you're using this tricky: you have to mark one of the three with a token. You can still manage some deception after this though, by having a genuine fusilier mixed in.
The Holoechoes are considered troops for most purposes, so they can be used to detonate mines. They also block line sight, which can occasionally be useful; but can also be a problem.
The model and Holoechoes only generate a single ARO, although that ARO may be Delay. This can be used to move the real model safely through an enemy line of sight by triggering AROs with a Holoechoe on the first skill and only exposing the real model on the second move. However this won't work against templates.
Try to predict whether missing points are Hidden Deployment or a disguised knight. A weak troop like a Regular left in a slightly vulnerable location from which it has the option to advance across the table is particularly suspicious.
A model's Hackable status is public information as soon as it comes within range of one of your hackers, so a repeater can find a Sepulchre Knight hiding as anything but another heavy infantry.
They're expensive unless you're using the Holoprojector to full effect.
Depending on what you plan to Holo as, a Sepulchre can remove the need for decoy Lieutenants by hiding the knight as a decoy.
Alternatively you can take a Sepulchre Lieutenant and use your only visible Lieutenant option as bait to draw enemies out of position. You may lose the decoy, but if so you're likely to have a more valuable enemy troop stranded in a vulnerable location.
You might as well always use level one of Holoprojector, whether you deploy with level two active as well depends on if you plan to use your Sepulchre in the first round.
Holoprojector equipped troops are typically disguised as either considerable more powerful than they are, or considerably weaker: for an elite heavy infantry all the powerful disguises have similar capabilities, so pretending to be weak gives more misinformation. Occasionally disguising as a powerful troop which counters a specific part of your opponent's list may be worth it, such as MSV2 against an opponent relying on smoke, but only occasionally. A weak disguise should ideally be plausible in your list, but not something which will draw fire: a fusilier paramedic or similar is suitable. Doctors and Engineers make very convincing disguises, but sometimes get targeted by an opponent trying to prevent you healing something specific.
Active Turn Role
Back-up assault troop.
A fusilier paramedic suddenly turning out to be a heavy infantry can sometimes bring an opponent's strategy for an entire turn crashing down.
At the end of your turn you may reactivate Holo2 for free if you're out of sight of all enemies, placing the markers in base contact. This is usually a good idea, although against templates it may be an unnecessary risk.
You can use this free base width of movement to enter Suppression Fire behind full cover, then step out into sight without taking AROs.