I hit the Zeus look-a-like blacksmith by accident with the parry button. I managed to kill him though because he somehow got stuck on the bonfire O_o. Was he a really important character? I just got the butterfly demon's soul and heard that you can use it to upgrade your shield. That sounds pretty neat. Are there any other blacksmiths in the game that can modify your weapons and armor?

Actually I think that blacksmith was the only one who can use the Divine Ember... so you may have to go without that upgrade path, but there are 4 or 5 blacksmiths who can upgrade armor and weapons. The easiest one to get to right now is in the londo ruins (take the elevator down from firelink), veer left towards a staircase above the water, and the smith is behind some bars.

I accidentally did the same thing with the merchant in the tunnel near the beginning with that single rat in it and now all she does is stand back in the corner and scream at me every time I run by. I hope she was carrying nothing unique or important.

Well great. If transient curses are what I think they are, that kind of worries me. Hope ghosts are susceptible to magic.