Despite the space faring premise, this piece screams "Shadowrun scenario" to me, with the majority fo the details easily alter to fit the setting. (Rather then another planet placing this in a suitable wasteland far from civilization, adjusting a few bits to include the magical ambience and races of Shadorwun setting etc..)
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Very well put together and added to my favorites list for later use.
A handy weapon, with a unique secondary ability over the undead. It does raise an interesting small question though. What of the long dead that were resurrected by necromantic magic? (Those who died days or weeks earlier and been laid to rest in the proper ceremonies before their corpses were raised as undead.)
Since they're spirits had likely "moved on" could the sword some how drag the spirit back to it's body one last time? Or in those cases would the strikes merely be severely damaging?
That small inquiry aside I really do like the weapons origin and it's overall plain appearance that could allow it to go unnoticed for some time if recovered by a wandering adventurer off the corpse of the previous owner. (A holy blessing would unlikely radiate magic either.)
A fun variation on the otherwise over done "magic sword" I can see a use for this in my current Palladium Fantasy campaign. :)
Endless fun, especially in a steam punk setting. I can imagine a huckster selling this as a device that grants bodily control over goblins or some such. (Especially if he has a trained goblin or halfling dressed as a goblin to help with the ruse.)
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Another lost gem worth returning to the forefront, (especially in light of the recent quest poll) While not overly detailed, it serves the purpose of "local color" for a magi institution flawlessly, and makes any rather un-noteworthy academy suddenly very memorable,.