The hand bomb is usually used on
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×the Adder earlier in Pirate Lair
since that enemy is very difficult to defeat any other way, and the treasure it guards helps a lot with the remainder of the hold.
However... (endgame spoilers, only look if you are really sure you want to know in advance)
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×There is a powerful enemy at the very end of the hold, so another good use of the hand bomb is to save it for him.
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50th Skywatcher