It's windy and rainy, so it's not a very nice weekend to take the kids out for a cache hunt /sigh... this is GREAT for you guys though. I get to share my wisdom!!
Reading through this thread, it seems that the owner of the item has replied, but there were some good points made here.
A knife is not a "good" item to place in a cache.
It's good to be concerned with other's safety while they are examining objects placed in a cache.
This little swiss army knife is not a life threatening weapon, but does pose a hazard if it has a blade out.
The knife probably shouldn't be modified, broken, or otherwise permanently disabled.
Someone suggested taping the knife shut, but realistically, the tape will probably come off after a short time, and leave a sticky residue where it used to be.
Here's my suggestion; Most any hardware, home improvement, electrical, automotive and maybe even a hobby or craft store has heat shrink tubing available in a variety of sizes for not too terribly expensive.
Here's a picture of heat-shrink containing a bundle of wires:
All you would need is a 1-1.5' length of heat-shrink tubing with a big enough diameter to fit the knife. A lighter or even candle will provide enough heat to make the tubing shrink tightly around the knife, preventing accidental opening of the blade, doing no permanent damage, and tough that a small child couldn't remove it in the time you are signing the log, but removed easily by an adult who ends up keeping the knife.
That's my $.02