The Tanner cannot be killed at this juncture of the game. The plot concerning him carries on a little further. You will have the oportunity to finish him off at another destination. I wont spoil it for you unless it is your wish.
The flesh will be useless to you unless you are an evil aligned character. If you are not evil then it is of no use unless you just want to finish the quest and have it made into armor which you can only sell for 1 gold piece. Only the evil protagonist can wear it.
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