After killing Raskalian and getting the assasins dagger from Scanthril, is there any reason not to kill him? He is evil after all.

Once you have the dagger, must it be equiped(i.e. in your chars hand) or can it just be in your inventory?

Reason I want to know is that I want to make my priest an assasin, but unless I change to paladin first he won't be able to hold the dagger when entering the thieves guild.

after getting the dagger the little punk sent me to a hole to get my payment for finding out what happened to the stout that was spose to kill Raskalian. Well that little hole turned out to be the bogore place. After I got over there my Assassin introduced Scanthril into the icestorm spell for sending me there.