I'm actually running this right now for my son and a couple of his friends.
I wonder whether Doug Niles was thinking about the cover to the AD&D Player's Handbook when he wrote this (the description certainly fits). Plus there's this:
At one time, two niches within the statue’s eyes held a pair of fabulous jewels, but these were looted long ago.
The "black-hearted cult" who built the monastery on the hill predate the arrival of the hobgoblin king, and were human clerics. Their last surviving member is living with the hobgoblins in the dungeon.
I searched around a bit, and found this
on the Role-playing Games Stack Exchange:
In the D&D Podcast, "Dragon+: Mordenkainen's Tome of Foes, 2/6/18" Designer Mike Mearls confirms that the demon is in fact Moloch, an identity which was earlier based on speculation, but now made explicit.
He explains that the demon was used twice in official material beyond its original appearance on the cover of the AD&D 1e Players Handbook.
There was a creature called an eidolon in 4th edition that was described as an animated statue, which used the idol design as the basis for its illustration.
Mearls goes on to relate a possibly apocryphal story based on Chris Perkins' research. Supposedly, the artist, Dave Trampier, nicknamed it "Molly". Later on, in Monster Manual II, the demon Moloch was illustrated to resemble the cover idol, so the inference was made that the idol was an image of Moloch.
Moloch is slated to appear in Mordenkainen's Tome of Foes as a fully statted and described demon, and its appearance will be based on that idol.