I went through the game twice, and I can say with confidence that leaving her alive is the only right decision.
In the option where Shadow Heart becomes the Chosen of Lady Shar, she lacks divine powers like Orin, Gortash, and Ketherik Torm, and some dark content INSTEAD OF A LOT OF LOST as a result of this decision. This could somehow motivate the player to kill the Nightsong, but now it's disgusting
I think at least we need content + spell to become Lady Shar's avatar, which can be used once per adventure, as well as divine intervention
