He is very very rarely going to need a melee weapon. It is more of a "just in case" thing. Daggers actually are useful to have in case you get swallowed whole. Reworking the rod isn't a problem especially since you don't have to worry TOO much about the market price increase and he is working for a master engineer.
I think you may have mis-read the weapon ability. I haven't seen it, but the idea would PROBABLY be that it doesn't form a streak 15' feet wide that moves with you, it dissipates when you START to move, and reforms when you STOP. Or maybe they just meant that moving doesn't run you into the cloud so you are safe from it? Or maybe it has separate language for that and it effects even your own square(s).