He steps up, holding the dagger over her like he's about to plunge it into her heart. Which, considering Daedric rituals, that could very well be the case.

"I am Madness, son of the primordial chaos. I am chain and breaker, I am burden and blessing, I am determination that defies determination. Hear me, Urge. You were planted to bear fruit for your malefic gardener, but now you grow wild and free. Your roots have found good soil, and you knows the voices of the trees and brambles that surround you. You are more than your design. So now I, as one of the moons that orbit close to the affairs of man, stake my claim and make it known to all that you are my daughter, who is to me beloved beyond measure. Hear me now, Urge, or that part of you which remains his. Here and now, I sever the line from lesson to legend, and set loose the tale to embrace what she will.

The knife plunges down with those last words, down down down until the hilt is flush to the skin above her solar plexus. No skin is broken, no blood is spilled, for in this moment the dagger is a figment, a notion, and it cuts only what Sheo desires it to cut. And so he twists the blade, going from surgeon to gardener as he moves to pull the severed root of Bhaal from where it runs deep into her soul.