Except she does need the sword. Think about it, why did her brother died despite being pretty young? And don't forget the water princess that tried to kill Sara warned Natalia that without the sword, her kingdom would be in grave danger. That's all I can say without goving out spoilers but the point is, things are about to get real ugly soon.
He didn't really give her the sword. She got it by accident and was going to die after being rejected. In order to save her, he told her that she could try drinking the blood. He didn't know that would work and was surprised that it did.
The princess was in no shape to handle the sword and may not have received it in the state she was in. We don't know that things would have worked out had Sara not come to help her or crucially, if Sara had died there before being able to help her. The Princess may have just died there instead. The Prince kept the woman, who was trying to save his sister, alive.
This is ignoring the issues of the princesses mental state and not knowing what future that would have left the kingdom in, even if she got the sword. The sword might be powerful but I imagine that, like any weapon, it's still reliant on the holder.
Sara's companionship with our princess may very well be what was actually necessary for an eventual better outcome. I assume her relationship with Sara is what will make her a better leader and more capable in the long run. Leaving the princess isolated, depressed and suicidal doesn't seem like a recipe for a good future. This all again assumes that the princess would have even gotten the sword had Sara not arrived.
It is about to get ugly though. I agree with that. But that's more just an unfortunate set of events in my opinion.