I've read The Calling, but I still let him live. If I remember correctly he pretty much said he'd abandoned his method from the book because he'd discovered the reverse Joining method between then and the Warden meeting him, so that potentially eliminates the ickiness of converting all life to Darkspawn.
From a narrative standpoint it's a much more interesting choice than just killing him, I think. It's a big risk with potentially huge rewards - not just for the Blights but for things in general. The possibility that the dwarves could negotiate with thinking beings and perhaps regain some of their old territory for example.
Sure, it could all go horribly wrong, but then every thinking race in this lore has had its bad moments, at least it's not an endless zerg rush of infectious beings that haven't the capability to even think of stopping. As long as you have a chance of reasoning you have a chance of peace - or at least that was how I justified it at the time.