Gunnarr the Peaceful is the leader of the raiders who would have raided Skjern succesfully without your intervention. When Preparations: A Motley Hird is started, you can let him join hird at the expensive of 5 reputation of Skjern. If you decide to kill him, you will gain 8 reputation points for the Skjern faction, but lose 10 reputation from the Northmen faction. If you free him, you won't lose or gain any reputation with any faction.
Due to his default stats, he can become an excellent Berserker, but its recommended to change the axe for a sword as the main weapon. Since the sword tree skill has damage dealing skills such as Heavy swing and Execute, while the axe skills focus on dealing with shield and disarming enemies, skill in swords suits the role of berserker better. Only 15 skill points are considered wasted if a sword becomes the main weapon for his dual-wielding weapon set when you start with his default stats.
Gunnarr can also become a good warrior by investing in his shield skill, though it means that either dual-wielding or dane-axes should be discarded, since you have only two weapon sets.
Due to his perception score of 1, he lacks the talent to wield ranged weapons, so he should use a dane-axe (rank 2) for enemies which are one hex away. In case enemies are out of reach he can use support skills such as Galder, witchcraft and others.
Gunnarr the Peaceful is probably inspired by the character Esteban Gallego from Expeditions: Conquistador. Both are large, muscular men with bald heads and with large beards. They also prefer to fight in melee combat, are the leader of group of fighters and must be beaten both by the player character. The player character can in fact make the same decisions for both characters when they are captured at some point during the storyline.