*Spoiler*
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If you talk to her with a paladin after retrieving the sword, she offers it to you as a reward.
*End spoiler*
It's significantly better than the scimitar +1. It does magic damage and is also a higher enchantment (+4) - so it is unaffected by certain creatures that have damage resistance against +1 weapons. It also does double damage to undead. However, it does not apply strength bonuses to damage rolls.
As far as I know, it is no more effective if you have a cleric of selune. Any character capable of using longswords can use it to good effect.
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Where there is a great deal of free speech, there is always a certain amount of foolish speech. - Winston S. Churchill
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