When I said elven blade I meant Kalen's dagger because it doesn't have the silver -1 to damage. However the masterwork quality of the silver one makes that probably a better choice for doing things like aid another in combat so I'm happy to go with it. Kalen is likely to fight defensively in the future with his tumbling synergy bonus just to provide flanking in most situations anyway so it doesn't really matter one way or the other with his low chances of melee hitting.
All out defense can not provide flanking, I believe, or am I wrong?