Thanks for all your replies. Some clarifications:
1) The clerics hammer 'Mercy' has the merciful ability, which means that it does +1d6 damage, but all damage is subdual. The power can be turned off, turning the damage into normal damage.
2) I'm not wanting to enforce 'low-magic' so much as 'low-mook-magic'. That is, the PCs and major NPCs have the usual recommended amounts of magical stuff, but Joe Badguy doesn't, which means that NPC badguys (as opposed to monster badguys) are weaker than their level would indicate.
Heres a list of the magic items the PCs are getting/finding out about next session:
Cleric has Mercy, the warhammer once owned by a warmaster of the (only good) church, which has a philosophy of not killing certain evil races. (Merciful, plus some kind of minor healing power equivalent to +1)
Duelist finds out that her inherited rapier was blessed by its original owner on her death bed to bring firey doom to the enemies of her bloodline (flaming) and that her pistol once slew a great orc chieftain in one shot (keen).
Monk A finds out that his short sword was once used to kill an evil fire elemental lord. The person who did so chanelled all his icy hatred of the creature into his blade, giving up his life force to do so, but empowering the blade with an icy touch. (Icy burst)
Monk B finds out something about his longsword (don't know what yet). Hes rather grumpy and antisocial and walks a fine line of becoming evil (either because he was cursed or because the player is grumpy, I'm not sure which)
Barbarian finds out that her longbow has thundering (don't know why yet).
BTW, any ideas for the unknown parts of the list above?