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I worked my way through this quest in the Shivering Isles to the conclusion where Muurine is executed in the torture chamber.

I searched the body - well no I didn't I just took the lot!

I found I could shift - I was totally over-encumbered!

When I relieved Muurine of her belongings, she evidently had about 9000 clubs on her person - all pretty worthless at 2 pieces of gold apiece!

What's that all about then?

Why couldn't it have been arrows or something?

Have I found another glitch?

A well-documented glitch, actually. It applies to all the Duelists.

1) Yes

2) No

3) They live in Crucible. They gather at a rooftop porch at night for wine, walloping, and whatnot.

It is a glitch then!

I collected up a few hundred and used a Repair Hammer. They reduced in number to 1!

So if you do want to use them to sell don't repair them!

Also I tried to stash some of them in Hittus Cluutimus' cupboard and they became stolen items. This obviously had the implication that they had to be sold in either Bruma or Leyawin to the appropriate fence.

A crazy realm with crazy stuff..
Muurine wanted the Syl dead, so what better way to accomplish that than beating her with hundreds of clubs aaand causing her inquisitor's game glitch?

No wonder the Dutchess is paranoid!

It isn't paranoia when someone is really try to kill you.

Gotta admit it though. She was paranoid as hell.

If I lived there as a ruler, I'd be paranoid too. Wouldn't you?

In that situation, the paranoia stems from a fear to lose control. A "They conspire because they want to take what's mine" train of thought. The seed of that fear is knowing that they will succeed if you let them continue.
If you're confident in your abilities, those whispers of conspiracy are just a background hum, not a threat.

Heck. I'm trying to imagine Casandra Serein sitting on a throne in the House of Dementia, thrumming her fingers on the arm of the chair.
"You're no assassin. You're target practice."