Chancellor has several very generic uses:
1. It is a deck accelerant. By getting your new cards back into hand ASAP, you can much more quickly build up to game winning buys. Because it is a terminal, this doesn't help out so much with most of the really strong cards - terminal attacks, terminal draw, etc. all conflict heavily with chancellor. In a BM deck, there is normally something out there that builds deck value faster than chancellor. It doesn't take that many trashes for something like steward, or moneylender to get faster than chancellor so as deck accelerants go, its pretty poor.
2. It is a dissappearing silver. For library, watchtower, menage, and the odd jack deck this can actually be pretty big. With chapel/TR/menage you can get a lot more out of TR/chancellor than TR/silver or TR/menage alone. The problem being here for spammable disappearing silver, duchess is better and that says a lot.
3. Reshuffle "management". A large number of decks have a tendancy to leave a bunch of dross near the end or force a reshuffle at a time when all your cards are in play. Playing a chancellor at the end of your turn can fix all of that. Common places for this to become a problem include: minion decks (we all hate knowing we are going to have 2 or 4 hands with no minions ... but if we minion for four and trigger it we might be able to nab a colony), apothecary decks, and golem decks. Likewise cards like spy and rabble are nicely circumvented by playing chancellor.
Still, most of the time smart play will either allow you to game reshuffles, or you will lack the option of playing the chancellor when you really need it (e.g. you don't have +actions and you need to play a poorly timed smithy to get those last two cards in your deck, odds of even a pair of chancellors being in your final minion hand are pretty low). There are also many better cards for getting rid of dross - warehouse, young witch, and cartographer come to mind.
So yeah on it's own it is good enough that I'll toss it in if I have no superior terminal or if acceleration is going to be huge. For instance if you know your odds of hitting 3P are crap for turn 4, then chancellor can save you in a familiar rush. Other than that, it is strictly a "use this only when nothing else is viable" for the basic stuff.
Useful synergies:
Counting house: ideally you chancellor everything and then CH for whatever you want. However this has the problems of requiring +actions, +buys (to stock up on copper, and still you have to hit a three card combo to make it work. Chancellor/CH/golems is much better (hit a golem, buy a colony, don't hit a golem -> buy a golem, copper, or VP).
Inn: properly executed chancellor/inn can give you pretty much an auto-hit on a massive engine every turn without trashing.
Treasure map: Chancellor increases your odds of hitting two maps quick a good bit more than many other deck accelerators. Unlike Steward or chapel, it doesn't have to struggle to hit 4 coin & buy a map on turns 3 & 4. Unlike watchtower top decking, you can still use the 3 coin card on turn 3 (rather than having to hit 4 coin & watchtower for good odds of hitting double map). This isn't a great strat, but it is better than straight map and its extremely high variance. Seeing a 5/2 break for the other guy in a witch game can make this one of your better shots of winning.
Forge: Getting to 7 is huge if forge is dominant or even viable. While something like baron is superior, getting silver/chancellor gives you slight odds and more importantly can churn new coin to the top pretty easy. Unlike other high value cards (like KC, bank, goons, etc.) Forge will take a less useful terminal silver and say crunch it to a gold with a regular silver, the big problem - of chancellor being a dead card to often - goes poof in the nigh.
Stash: get 4 stashes, get lots of chancellors, give yourself a province every turn after you play a chancellor (one of the few strats that makes going heavy chancellor good). Still tends to be slow.