A) It still drops.
B) It does drop from the missionaries in the south huts. Killed four times in the north hut, then ran down to smack the ones in the south huts as a just-in-case. Lo and behold, one Coldain Fetish.
Now, off to kill some giants to make up for the deaths of the poor peaceful mercenaries..
((Note to MMORPG developers... make it so that people with really good faction can get items like this... which have nothing to do with either faction, really... without killing the mobs! Make us buy it, maybe, or turn in snow-bunny pelts as a peace offering, instead of making us pop poor little dwarven skulls?))