Actually a hammer can't batter dragon - so the hardest thing in the game i would think would be the hammer you get from the dwarfs in keldagrim for 1 mill that an batter the dragon. (i want a hammer as a weap - maybe change their platelegs into a plateskirt with a couple of blows like you can in smithing) Just smith it into a sword, they couldn't possibly wear a sword as pants! Hmmm, wouldn't a chisel be harder? It can cut diamonds in seconds. Even cut them into arrowtips! Diamond are the hardest substance currently known, yes. But If you understand how hardness works (As things get harder they get brittler. Watch the mythbuster's hammer episode they explain it) it isn't unreasonable to cut diamonds. Another example would be concrete. Hard, yes. Lay a sheet of it on two raised platforms and you can snap it easily because it doesn't bend.