I am wondering if there are any long term consequences to killing the stout king Freyedies. I know that most of the chests are just spam loot, but there is a lot of it and it comes in handy to build those skills.

So, any reason not to do it besides morality?

No, there is no downside. In fact, it seems morally right, considering that he only helps you open the way for him to continue taking advantage of the Dragon Spire's riches. And is too greedy to give up any of his current ore. (There seems to be some incomplete storyline here, including him having his guards under mental control [see both their overly-loyal chanting and release from Twisted Master when you kill Freyedies] and possibly having had the previous king assassinated.)