Zelgius is considered better than Black Knight because he has the boosted BST, the potential for IVs, and ability to receive up to +10 merges. (Honestly, he is probably the best unit in the game because of his busted Black Luna and access to Bold Fighter + Steady / Warding Breath + Quick Riposte, which turns him into a massive monster on both Phases.)
His IVs are also fine, so don't worry about them too much. Zelgius' best boon is Atk; and, as you said, 35 Def even with the bane is still pretty high. (For reference, Grima's Def at Neutral is 35.)
If you do not like W!Lissa or fail to have a good use for her, then you could fodder her off. Zelgius uses the skill very well. However, keep in mind that she is limited and that Bold Fighter is available on Hardin (granted, he is also one of the best units in the game).
Honestly, his default kit + Bold Fighter is pretty nice and will serve you well. If you are using him in Armor Emblem, maybe replace Panic Ploy for Ward Armor, but it is not necessary. The only other suggestion is that you should give him Quick Riposte as the seal so that he can still function as a monster on Enemy Phase. Fierce Stance is no Steady Breath, but +6 Atk when the enemy initiates is still very good.
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