Also if this is a multiplayer game such as WoW or Guild Wars the quests could interfere based on the # of players. What you could do then is: Make half of the army undead and half living. NOTE: The undead and living armies fight eachother
Remove them entirely until one of the players leaves, or until all players have the same faction
Undo the quests, making the Shadow Blade return to normal as if the quest never happened until all players have the same faction. The quest is not available even though undone
These are just a few things you could do. I do not think that randomly choose or picking the strongest/weakest one of the party's faction wouldn't be very exciting, and also of very little logic. If you choose there death, and all of a sudden they are alive, it is just wierd (GW did the same thing but nobody seemed to mind, although I still don't think its a good idea)
Also your reputation has been increased to 5 (Administrators Choice)