Killing Smitty is a bad idea for one reason -- you can (with a lot of effort) get a Vulcan Hammer from him, without cheating. (Well, just a little cheating).Once in a great while, he'll offer to sell a V.H. for something like 18000 GP. You could, of course, pay this, but if you've got a decent thief, you can steal it. I've had something like ten of them before (took a couple days of restarts to get 'em all). You can get 'em waaaaay before you should have anything near that powerful, which gives you a big leg up in the middle part of the game.