An update for this particular bug. The fact is that the

<ApplyToCaster>

modifier is not functioning as intended. The modifier changes the "Target" of the spell and thus all the tags that are associated with "TargetUnit" and "TargetCity" are not directed specifically to the caster. Thus, any spell that has the tag

<ApplyToCaster>

the target for that particular modifier of the spell will be the caster and you cannot use any data to the spells original target. This is why bloodcurse does not work.

(Syphon Strength) is another spell that uses the <ApplyToCaster> tag and "TargetUnit" within the calculations. All other spells refer to the casting unit.

Was wondering about BloodCurse and how it worked when you remove the enchantment. The Sovereign is still unable to heal naturally or with "Regeneration" enchantment heals after BloodCurse is removed. Is this as designed? 

This will probably have to wait for patch 1.  But it is on the list!

The spell is not an easy one to aquire in the first place. It is an epic quest reward at the moment. I can provide a modded fix for the moment, instead of getting half the population in hitpoints I could say triple the spell casters current hitpoints instead. If it is fixed properly, Stardock could provide some rather fun spells as DLC. Depending on the fix, readjustments to present spells may be needed to provide better information.