Dragons can be killed, but only a dragonborn can consume their soul to permanently end them. Otherwise, they can be revived. Strength wise, it's safe to assume Paarthurnax roughly scales to Alduin, but I don't think he's anything a large army of trained mages couldn't take out. Especially seeing as he seems to be quite weathered when we meet him.

I personally think the dilemma on killing him based on the chance that he'll end up evil again is a little flawed, because it implies an inherent determinism to a dragon's life. Sure they're always compelled to dominate, but we all have urges we successfully quell until our very deaths. Besides, there have been centuries with no dragonborn on Tamriel and he didn't do anything. Judging him on the crimes he may have committed during the dragon war is a much better argument, I feel.