Master McCloud sees himself as a star-hopping, interplanetary hero. Given half a chance, he will regale anyone with tales of his many exploits. This probably explains why he has been stationed on a remote dustball like Pandora, as far from the Atlas HQ as humanly possible.
Master McCloud will drop his Eridian Cannon when he is killed. On Playthrough 2, he will drop a level 48 Eridian Cannon.
The Crimson Fastness is unlocked along with The Backdoor upon opening Baron Flynt's chest in Playthrough 2, so it is possible to skip the fight with McCloud all together by simply teleporting to the Crimson Fastness instead of travelling through the Backdoor.