It is working as intended. Leech basically uses any blood source to heal you. The only thing may/may not be intended is the way bleed works.
When your toon bleeds, she is soaked in blood. Bleed only procs one per turn AND if your toon is soaked in blood. Leech removes the blood and as a result, bleed keeps proc'ing until she is healed to full and is soaked in blood again.
And this is exactly how poison and burning work. The damage is incurred in all three cases when your toon's body is soaked with blood, poison or doused in flame. That is why when you set a poisoned npc/pc on fire, the poison is consumed to make explosion and poison damage keeps proc'ing.
Unintended consequences maybe but the mechanics is exactly how it should be.
@rtkfner: try ww. If you invest in your 2hander, 1 ww = game over. Your mage can just stand there and watch.