I think that the Duke should absolutely use it on Day 1. Hitting a villager is unfortunate, but just as likely without the duke using the ability. However, by Duking the village suddenly has a trusted player right off the bat. And there is little incentive to kill him by the wolves since:
A. The BG might be protecting him
B. Much better to try and kill the seer
Normally after a D1 the village has little actionable information. With a duking that becomes not true.
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