Water Dragon and Nagas...

[Lord Blade]

So, I can do the quest, or kill the dragon... or start the quest and kill the dragon. :p

What happens if I kill it?
What is my reward from the quest if I let it live?

[Frumple]

You can start the quest, kill the naga, then kill the dragon. This is the optimal (and least moral) path.

If you kill the dragon, you get XP and loot, as per killing your average boss or unique.

If you kill the naga, you probably get what is more or less the best artifact light in the game.

If you kill the naga, then the dragon, you get both!

If you let the dragon live, but kill the naga, you just get the light.

You get nothing for letting the dragon live -- except, of course, actually holding to your word. Also, not committing bald-faced murder.

If you let the dragon and the naga live, you get absolutely jack.

[Lord Blade]

So, having the dragon open the portal, then killing it is fine then?

[Frumple]

I think so... never actually tried that. Always got him on the return. He's not exactly a hard fight, but the pearl makes it even easier

[Zonk]

If you kill the naga, you probably get what is more or less the best artifact light in the game.

Though that might technically not be true after considering randarts(randart lanterns can be exceptional ), it's still a very good reason to kill Slasul. Guaranteed awesome artifact light!

[marvalis]

The only reason not to kill the naga is storyline and lore. (note you do not gain any actual lore or storylines by not killing them, but not killing them could be a roleplaying decision)