it worked for me...4 black dragons :D
still curious what happens when you banish Glaurmur. if I had more time I would do 2 play throughs but unfortunately...

thanks for your comments anyway guys

I tried both options as a lvl 21 Viking on Hard difficulty.

Banishing him nets 5,517xp and about 50k gold (this will vary depending on equipment, awards etc - I have a +5%xp item as well as max learning and the other bonus xp awards)

Dealing with him nets an extra 25k gold and a lvl 5 item for me (the dragon necklace), but only a measly 837xp. It also unlocks the option to trade with him for more items etc

Quite torn about the options at the moment, I always love collecting items and artifacts, but the xp differential is huge...

Edit: just to put it into context, the difference in xp is about 10% of my total xp at lvl 21...