Indeed. Dabnte still has I6, he just strikes on I1 when using the axe. Likewise for Kahrn. If you lowered their initiative it would lower their base and not change the fact they strike at I1. Likewise, if you raised their initiatives, they would still strike on I1
Anyway, for the record I'm done talking about Dante's axe. The rules are as written, nothing but an official FAQ will change it, we've discussed it to death. Clearly at least one person isn't convinced and it doesn't look like anything anyone says will change anybody's mind so if the day ever comes I'm across the table from Azrell we'll just have to roll for who's version we'll use.
I'm going to take some asprin and check out some other threads for a while ;-)