Indeed a rather strange sword. As you mentioned, Thoul, it must be an early blade in the game, probably the short swords, since the weapon is small. Can't figure out how one could handle it but maybe the odd hilt is the reason why you even have to use the short sword with two hands. I don't think it is necessarily rusty. It appears more like an old sword from the Bronze Age with an unfamiliar design. It looks cool but also not too useful. Although I am pretty sure that especially Rhys will find a way to use it effectively.
Can't wait to see the artwork of a needler