Yeah, I let the priest PM me their intent to use their holy water. Or I treat it almost like a night role, and PM the priest when a lynch is decided on. Either way, if the priest wants to reveal who they are, they can do so in the game thread during the day phase, just like anyone else who wants to make a public revelation, where it would not be confirmed by the GM. Posting after the vote closes is as always, forbidden.
When the ability is used, the flavor text would read something like "the executioner was passed a vial of holy water through the crowd...", etc, and would not confirm a player's name. After all, the ability was only ever meant to completely confirm a single player the one being lynched.
The priest's ability was not used this day phase.