Worst ... reward ... ever! Something smells "fishy" here.

......We saved the City of Caverns from their mad king, and when I opened up the treasury to collect the promised payment, I found ... one crappy Rod of Lordly Might? One of the wimpiest weapons in our arsenal. Oh, and I get a rope to climb to the Underdark. Whee. If I hadn't stolen the Wave Blade from Prince V. the Fishboy, the whole thing would have been seriously underwhelming. Bah! Humbug! 
.....Addendum: OK, we also got the Impaler +3, but I don't count that as part of the reward, it was loot dropped by the insane Fisher King when we deboned him. Also, nobody in my group has any proficiency with spears at all.

.....Addendum: OK, we also got the Impaler +3, but I don't count that as part of the reward, it was loot dropped by the insane Fisher King when we deboned him. Also, nobody in my group has any proficiency with spears at all.
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Correction: OK looks like I was wrong. She CAN use the impaler. The last time I tried to give her a spear was years ago, back when the game was using V 1.3. Ugprading to the current version must have corrected some obvious flaws.
.....Now all the weapons that the Rod can turn into have the ability to induce certain status effects on the targets struck. This would indeed be a bonus, IF these effects weren't so easy to save against. The enemy struck saves against said effect with a +4 or +5 bonus. So, when fighting foes our own level, these effects are actually unlikely to happen. Yeah, they could still occur, but it's not worth relying on that possibility. Better to use a more reliable weapon.
.....All the weapons my crew are currently wielding are better than anything the Rod can generate. I have no intention of listing all the various weaponry we currently have available, but let's take Dorn as a typical example. He currently has Daystar, Foebane, Lilarcor and the Firetooth crossbow. None of the Rod's weapons can compare to any of those. And everyone else in my crew has similarly better weapons, ranging from +2 to +4. Even Edwin is packing the Crimson Dart. I rest my case.
..... If anyone has a counter argument, and thinks that the Rod of Lordly Might is the best thing since sliced bread, I am willing to listen to your peculiar logic.
I'm about 50/50 on if I just destroy both sides or not, it usually comes down to the main character. My current guy, Gerold was just appalled by the insane evil, and destroyed them all. A previous character, Psyche, was a little more gentle and kind hearted. Since the Rebel Prince's adviser didn't detect as evil she took that as a reason to let them be.
They are better than the ones from the temple.
Actual effect, in the current EE: immunity to all spells of the "offensive damage" type. Which includes all of the most dangerous beholder rays. You can still get some lesser status effects, but the damage ray and all three killing rays are blocked.
It does not reflect anything back at your attacker.
That's why I dropped a bunch of cash on the Shield of Balduran, way back in Chapter 2.
Also the area becomes quite fun with morpheus' mod; the Avatar fight becomes more challenging. And I think the reward is then also nice. The rod remains crap though. I never use it, e. g. just leave it where it is.