I found him on my last character and it was a tough place to clear even with a follower and reanimated bandit corpse on my side. I tried a couple times without releasing the cat because I wasn't sure how that would play out, finally I just said "screw it" and managed to get the key and open the cage. He went after the last few bandits and took out all but the boss, who finally killed him but only after taking quite a bit of damage himself. I just watched until the cat went down and then we finished off the last guy ourselves.
They killed the cat on my assassin chick. With her sneak skill I had no problem taking out most of the bandits, but to be impish I released the sabre cat (I picked the lock while crouching on top of the cage.

). He killed a few bandits, but one of them eventually killed him.

Good to go. I may have to go get me a kitty tonight.

Be careful because I think what happened in my game (scenario above) was that I was pretty high level when I came across Lost Knife (60s). As a result, the bandits had kinda' leveled with me and had a higher cap than the sabre cat so they were able to defeat it.
