Hi Mike,
Since you asked for comments, I hope you don't mind mine.
1. Most collectors want the "original, untouched, authentic" dagger in cases where the dagger is complete, intact, and in good condition. This is not the case with your dagger. It biggest problem is the grip.
2. Restoration can hurt value, but it can also increase it. This is why Tom Wittmann offered a restoration on it if you choose.
3. I know other dealers that have had SS dagger sold with brand new machined grips. They advertised them as such, and the daggers looked outstanding. The grips were machined with the same type of wood as originals and made to match the current crossguards exactly. My opinion only, but these are much more desirable than a dagger with a broken grip. Paul Hogel used to offer this service, but I don't know if it is still available.
4. I also would have jumped on the 12K offer had it been my dagger to sell.
Considering that all dagger pricing has been rising the last couple of years, you can just hang onto it as is your plan. Your father left it to you and it is your property to do with what you wish.
Cheers.
