Only real drawback is that he's no longer around to forge armor for you.
A good thief-type can steal both the key to the vaults and any dragon ore you have already given him, then hand it right back for more (I have 7 suits of armor).
The trick to the armor is that you have to leave the mines and re-enter...unload/load Stout Mines will do it, so you don't really even have to leave, just have the guard open and close the doors.
The other trick to the armor is that Freyedies will only make one suit at a time, so if you give him both pieces of ore at once, or even have separate characters give him one piece during the same trip, you will still only get one suit back.
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