From what I remember everyone has a magical resistance to that sort of thing, unless you have a lot of power in excess like the captain vs the thugs, and it can be stopped by people with natural powers (magician and priests) or with magical objects ( enchanted rings and equipment). So I doubt she could have done a telekinesis kill without the sword as a conduit.
The last blow wasn't telekinesis.
Basically the last part was Fissel baiting the priestess into fumbling and wasting all the advantages she had built up.
Fissel was losing in raw sword fight because of weakening magic on her arms (and using strengthening magic ot counter that leave her unable to use other magic) and the mana disparity means prolonged fight was going to ends up with Fissel running out of fume and lose.
So Fissel use telekinesis to make the priestess think that was Fissel's answer to not being able to use her arm properly and made a stab from the blind spot.
The priestess thought she could use the 'use my body to keep the sword still' to counter that and go for the kill.
Except that was what Fissel wanted-the priestess to get close and her own sword tightly 'held in place'
Then all she needed to do was to stop telekinesis, touch the sword and use her magic slash attack from inside (thus no way for the priestess to avoid it)
tl;dr priestess got outplayed hard.