Huh. Pear is right. Short Swords and Short Bows are standard Skeletal fare. So the Mordguard must be proficient in them. That and Medium Armour is probably the best you can do. I can't quite imagine Rapiers and Longbows, I'm afraid.
I guess you weren't there for that...
Yes, the flesh falls of the bone and the skeleton stands up. It's vile. Sesto might let Mord get away with his nice clean masked undead servants, but he might object if he ever sees Mord use the dagger to make one...
Mord will do his best to keep them away from Sesto in the event of a turning. But he won't exactly cry if they do get turned. He isn't sentimental or anything. To him, it's just another form of rebellion and a utilitarian tool for him to give himself a bit of extra protection.
Also, Sesto has seen the dagger in action already and he'll recognize it on sight.