Swords do more damage but have 30 more recovery time if I remember right. A good hour of power spell should get her recovery time down to what a dagger is. I don't remember what level of hour of power you need to achieve this. If I use Cauri a lot of times I leave her with daggers for a while. Once I've gotten all her misc skills up I duel wield swords with her. I mostly use the sword you win for the Arcomage quest and use a sword of darkness in the other hand. Generally you should find more than enough good swords throughout the game even if your playing a party of multiple sword users.