We're getting heavy on the speculation here--just cause we haven't seen him use a sword doesn't mean that he wouldn't or couldn't--and if that sword's the Masamune, then maybe he'd just ditch the scythe for it.
However, I really doubt Magus would make such a drastic move for no apparent reason. Facepalm's aside, we assume Eclipse Magus is Guile, but we have no definitive proof either way, theories are theories after all. On an even more important note, why would Dalton even ally himself with Guile/Magus? If Dalton recognized Magus, I doubt he'd show anything but contempt for the man...then again, knowing Magus's power, maybe he utilized a confused Magus as an asset of some kind.