Well, Jack Palance played mob boss Carl Grissom in that film. And in this particular Batman movie, Grissom tries to have Jack Napier/The Joker killed, leading to the deformations that give the Joker his signature perma-smile and green hair. So, the Joker is out for revenge on Grissom, and as you noted, the man in the video does look an awful lot like Jack Palance's Grissom in that very film:
So this may have been part of the Joker's revenge scheme on Carl Grissom.
(Is it possible that the Joker had time to film a little something before Grissom died? Especially given the extra allowances for suspension of disbelief that super hero movies of the era often required.)
I looked at the cast list on imdb.com, and couldn't find anybody else whose character title would fit into the description of "male hostage in Smilex advert." (And imdb tends to be pretty thorough, as you can see.)
Other possibilities may include...
- The actor might actually be Philip O'Brien, who plays a super
minor Maitre D' character, but actually looks a fair amount like Jack
Palance. (Since the role is so minor, Tim Burton may have simply
double cast him without giving him secondary credit as "the hostage
in the advert").
- @Erik presented a theory that the Joker is using a body double that
purposefully looks like Grissom, which would allow Palance to act in
the faux commercial. (This could make sense in that for a while, at least, the
Joker publicly acts as though Grissom is still alive, so that he can
claim Grissom put him in charge while the mob boss was "away."* So depending on when the commercial aired, this could kinda make sense.)
*I know I'm using imdb way too much here, but to quote imdb's synopsis:
Back in the criminal underworld, the Joker claims that Grissom has
gone away for awhile, and has left him in charge, Claiming to oversee
all of Grissom's affairs, the other crime bosses are not convinced,
and still fail to acknowledge this, even when the Joker electrocutes
one of their own.