Yep, you don't have to kill him at all (in fact, it's probably not really very nice to do so - after all, he is a reasonable guy
).
As for following the plan, make sure you read it and pay attention to the arifacts you have to get before you go facing Dagoth Ur. Not much point going straight to Dagoth Ur and then having to leave and go get your equipment
. However it's a little bit melodramatic. You probably won't need to 'set up a base at the ghostgate and go back for supplies after each sortie' or whatever it says. In fact, the guys at ghostgate are really unhelpful. I tried to talk to them about going up there and they didn't have anything to say
