Another cracky twist option that just came to me…
Part of my thinking with the Brothers theory has been that Pan kidnapped their father, to leave Rumple feeling abandoned, (because Rumple was the favoured son, so Pan wanted to make him suffer and steal their father back for himself), and he’s had him prisoner in NL. It’s why I thought he could be a contender for who was in the other cage, but now we know that’s gonna be Wendy, (pretty sure an article somewhere confirmed that?).
So, what if the way Pan imprisoned their father was to merge with him somehow? Maybe he took Daddy’s shadow and attached it to himself? That could explain Pan still having a shadow, but the Shadow also being his, if he’s got two of them. (Rumple did say “Pan” when he saw Belle morph into the Shadow, so I’m thinking it’s likely that the Shadow is actually Pan’s, but we’ve also seen Pan with a shadow attached to himself). It could even explain how perhaps they’ll defeat the Shadow, but Pan will still live, if he and his original shadow are no longer tethered because he got himself a new shadow instead.
So, with the stabbing, perhaps killing Pan is the only way to set their father free of his imprisonment? Papa will die in the process, but it’s the only way to free his tormented soul. Rumple killing Pan, as a means to setting their father free, would actually be an act of compassion, showing that he’s no longer holding the abandonment against his father. Perhaps whatever Neal is looking up at is his grandad’s shadow, or even just his spirit flying away once it’s been set free? (It sorta reminds me of the end of the original Little Mermaid, when she goes to throw herself into the sea to turn to foam and die, but instead her spirit was lifted up with the daughters of the air. Kitswitz would have had Little Mermaid-y stuff in their heads when they were planning this first half of the season.)