In the story I write about Sebastion and Noshi, Sebastion comes upon a magical sword which can be sheathed in flame while in battle. In truth it is a standard sword issued to the mage blades of Varanath. These blades, usually long swords, can be sheathed in flame when called upon. They deal extra damage, especially if the person struck is in flammable clothing or armor, and do give off some light that a person could use to see by. The also give extra defense to the wielder, almost like a magical shield which slows down the blades which are meant to strike them. The blades have runes up the center, spelling out "Varanath's Flames of Protection".
In game terms they do fire damage (what ever you deem appropriate for campaign and level), are a +3 magical weapon, and if the first time a user is attacked a shield spell (or something similar) springs to life around the wielder for the spells duration. Also the light given off is dim, so a person can't see very far with the light of the sword.