I'd say that killing with the basic weapon:3 wouldn't break the laws of magic
Killing when using it as an enchanted item would break the first law, but how does the enchantment work? Is it 5 shifts plus Lore plus the focus? Or by '5 power' are you referring to just the Lore value? With 1 enchanted item slot he could make the sword count as weapon:6 automatically, then you could add up to 4 more enchanted item slots to make it a maximum of weapon:10.
Assuming that it is weapon:7 (2 enchanted item slots is a common number for an item) with a default of two uses due to the focus item, it could attack at more than one zone away as MijRai quite rightly points out; so I'd suggest including 'Attitude Adjustment' in to one of his aspects in some way and then whenever he'd benefit from it being a ranged weapon, or if he's run out of uses and he needs it, he can gain fate points for self-compels as he is limiting himself. Then if he ever does decide to use it a 3rd time in a session he can pay one mental stress to activate it, then you can give him a fate point as the sword blows up and you can allow the attack or not; whichever is more fun
In fact he could pay a fate point to declare that his 3rd use of it makes it explode, dealing that amount of damage to everything in the zone
Oh, allowing others to use it costs a shift of power, he'd either need to reduce the power of the item or use another enchanted item slot.
ps. If you've house-ruled that you can use shifts of power to add to a weapons value then you can ignore most of what I've said apart from including the sword as an aspect for the shatter effect.
