The temple is in the northeast corner of the village. It's the large building with the pointed-roof tower.
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There is a third path to the quest, but it's somewhat hidden. You have to talk to a character you wouldn't really expect to be involved in the quest.
Killing either of them is intended to turn the village hostile, like killing any other villager. There will be a way to murder either of them in a sneakier way that won't turn the village hostile, but it's not yet implemented.