Does the Crestfallen Warrior have any plot relevance, or provide any rewards?

Crestfallen Warrior has no relevance to the plot, has no questlines, and doesn't offer you any reward of any kind if you keep him alive or remove his hostile status. The only thing you'd really miss out on is some dialogue, but it has no bearing on the plot.

In short, there's no gameplay or story benefit to paying those 32,000 souls to forgive your sin of attacking him.

As for killing him, doing so will actually grant you 1,000 souls on NG. 1 2