Killing Barlone:a) Wait til later. Take a look at the encounter level. You DON'T need to kill Barlone to kill the breeders.
b) Lots of Superman and Granite potions, Guardian Angels, and the like. Even then, it won't be easy, especially if Milano is with him. I had an advantage; Milano moved out of my way.
The monster and animal parts can be used to make 'special items'...certain NPCs use this term. Ask them about it...