Wyll and Karlach in Act 1

I have only played up to almost finishing Act 2 and then I started over playing as Origin Wyll. In Act 1 I am told to kill Karlach. All that I know is I will get a chest piece and not have horns. Is that about it for the whole story or will it affect late game? I will not be having Karlach in my campaign if I let her live. She would just be a camp character. I was just wondering if there is much of a difference if I let her live or die.

Edit: or would it be better to let Karlach live, drop Astarion from the party and pick up Karlach?