You can get a merc commander killed, yet still employ his/her troops in the same battle, too (they're gone afterwards though) - that's a good way to try to bogart any magic items they might have, if they've come to outlive their usefulness...
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"I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part"
Yes, it refers to him keeping a cigarette in his mouth without actually smoking it. (So more of keeping something to yourself / Not sharing, as opposed to actually stealing something)