Is there anyway to heal Gregor?
no. well in a way you "heal" him bringing him back to fresh air in aleroth but this is a very definitive cure...
What are the pros and cons of actually giving Slasher back to the Head Orc? Do you get exp. points? Would you be better off selling it or perhaps stashing it until you are able to wield it?
you can not to give it back... you can kill the orcs (but with a high level... especially for smiruk, because he's really not easy to kill, impossible in the beginning)...
you got XP (how much? it partially depends on your level) when you give back slasher... you can find a better axe in the catac... normally... (often it is the one in the room with the skeletal conjuror)
edit: if you sell Slasher to Gemoe you will be able to re-buy it later... don't sell it to Georg!