Newer did it myself but I know some players do.
Fearsome is probably useless in this case because you’re doing lot of HP damage already, thus morale checks are triggered anyway.
Personally I don’t see this build so useful. I carry dagger on all my mercs with exception of archers and crossbowmen. When I see it tactically beneficial, I simply switch to dagger. I get only 2 attacks per turn instead of 3, but on the other hand I have much more tactical flexibility and freedom. Even strategically, I don’t have to worry about having dagger specialist taking up place on my team when he is effective only in some fights and against some opponents. And then 3 attacks might not be even option in many situations simply because you would not have enough fatigue to perform them.