Hi Tim,
I would agree that it was made for use (as opposed to the sailor theory), if you could demonstrate that it's more than 130 years old. That's when the Torres Islands were annexed to Brittain (
Torres Island History Link). I'd also be happier if there were use marks along the blade, which I don't see in the photos. As sawfishes reportedly don't regrow lost or damaged teeth, I doubt that the condition of the teeth is evidence for human use.
In PNG, most of the bone tools were phased out in the 1950s in the highlands. Along the coast, it happened much earlier. Similarly, bone and wood weapons are still used in the remotest parts of Amazonia and the Andaman Islands, but the sad fact is that advanced cultures have done a pretty good job of penetrating the rest of the globe.
While the Torres Islands weren't much visited before the 1860's, they lie directly on the major sea route between India and Australia. Assuming that's where this sword came from, they aren't in a good location to retain traditional weaponry such as you're assuming this sword is.
On the other hand, I have yet to find a sailor's carved sawfish bill, at least on the web. I'm not too surprised, given that Google is not showing this conversation when I search "sawfish sword." I'm also bugged by the "tar" on the pommel. If that is truly tar, I'd suggest that strengthens the case for it being sailor-made. The Torres strait islands don't have petroleum deposits...
F