Yes, you can kill the Prince Villynaty after you finish and grab the blade.
It does annoy the rest of the sauhaugin rebels, and you get to fight even more fish-men. The Mermen should love you after this.
In fact, you can pickpocket the king, grab the rope, loot the treasury, and pickpocket the prince, leaving their "salvation" up in the air if you have a mind to, but since you get the exp so easily, that's not a route worth contemplating. It's much more fun to kill every bleedin' Sauhaugin in the place - in fact, I have that same attitude about the Drow City
