The in-game coding sets the Jeweled Rapier as a drop from the Encapsulation Pod despite the pod never actually "holding" the rapier. It's instead by a corpse.
The Jeweled Rapier is notable for being the third most powerful weapon in the game when combined with Raphael's Rapier Training perk. It's beat for second place by a champion with high corruption that is using the Scarred Blade, and only slightly so.
Weapons are equippable items used to boost attack, among other effects.