Nathaniel proposes that the Warden-Commander conscripts him into the Grey Wardens, but his fate remains in their hands. The other companions' approval will change:
Should Nathaniel be put through the Joining, he will survive.
Choosing to kill him will make Nathaniel hostile. If he was previously allowed to take his family relics, he will not drop the items (the ones found in the chest marked "Prisoner's Effects" in the dungeon).