In looking again at the rather miniscule dimensions of the grip, that does seem to negate actual functionality as would be intended with a sword. While I don't always consider the childs sword explanation, I know there are many instances of such weapons intended for young boys in various cultures, but unsure of this case here.
Naturally there are a number of possible explanations, but it seems that a 'parade' or ceremonial/ theatrical case might be plausible. In certain religious and traditional events this could be a sword worn as a kind of prop, while never actually being wielded.
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