I kept those useless items, but there is no need to do so.
The stats on that dagger, and everything else, are random. I avoided Frost on weapons, and did not notice that problem with the Frost sword I tried briefly. It does seem like just a timing issue, though.
You can not help them or tell anyone about the situation, though after you kill them, the billboard in front of the castle is updated. You can simply avoid the camp until after you meet one of the 3 mages, after which the spell will be broken. I opted to take the experience points, since there were no negative consequences to killing them.
The answer to your other question is 42.
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