If I step through the quest in game, checking whether or not he is essential (prid 1a691, isessential) he should be killed I think during the 'rampage' portion of the quest. At least, that is when he is no longer essential. But, even though he isn't essential according to the console, he still behaves as if he is. I can't figure out what is going wrong.
EDIT: I may have a mod that was causing the issue. Oddly it persists even when diabled, so I'll probably have to start a new game with it disabled to be sure. If anyone is interested, the mod I think my be causing the problem is "Everyone Get Inside - Dragon Attack" as it sets Skjor to protected.