I just now killed this demon, and came here looking for this same answer, but found only the unanswered question.

So I did some experimenting and re-loading, and so far I notice only the following effects from drinking the blood:

VIT -5
STR +10
INT -5

Anybody see any other effects?

Kind of lame if that's all it does, and not worth failing the quest, I don't think. Unless maybe you use this in conjunction with a respec from mage to fighter or something...

My first post here, btw. Fantastic game.