He tends to drop a single medium-high level item and give 1000XP when killed, but he is not very dangerous for the XP and item. There are no known side-effects besides not being able to complete the What's Eating The Watervine? quest if you kill him before you finish it. However, if you do finish it, feel free to close the door and kill him.
He is also the easiest creature to kill who has a max value +3 ego face, so it can be worthwhile to keep using dismember on him until you acquire it, just be careful not to be seen wearing it in Joppa if you don't want Mehmet to become hostile.