Raphael (Act 3) question

!I know that if i accept his deal I can still break into his house, steal the contract and the hammer while fighting him. If i decline, i can again steal the hammer and fight him. My question is, if i say no, but im also unable to win the fight against him, id go back a save and go on with my life. Would he then appear during the final fight and ask me if i want the hammer even if i already declined his deal once? Also, i kind of like him so i dont like the idea of killing him. Can someone convince me its the bad thing to do to give him the crown storywise...!<