Blood magic isn't inherently evil, like how Merril uses it. Sure, it original came from demons, but you don't /need/ to learn it from a demon to learn it. Like with all other types of magic, it's how you use it that defines it, magic isn't inherently evil, it just is, like nature.
He probably just wanted to help another mage escape Templar persecution, and I can't blame them at all, as Mages have been taken from their families to live in practical slavery for ..what is it, over a thousand years they said? And, the mages turn to demons sometimes, yes, but if you notice it's only because they feel it's either that or they die or become a mindless slave. Back any human into a corner like that and they'd become the devil if they had to, to come out alive and with their mind intact. That's why I think, if Mages were given their freedom to govern themselves, with Templars helping to police the really bad cases, they'd turn to demons less and less. Nevermind the Tevinter Imperium, it failed there because the mages there were always corrupt. Personally, I'd support mages being freed from slavery over them becoming mindless and powerless puppets. I think that tranquility is worse than what the Qunari do to their mages../and/, if they continue treating mages this way, they will lose one of their strongest forces in the wars against the Qunari and the Darkspawn.
No matter what you do, Isabela won't move in with you if that's what you want to know. As for Hawke's mother, it's part of the story, no matter what you chose, the end result is the same. How you get to that result differs though. If you side with the Templers, the final fight is alot easier, and you find out you could have saved Hawke's mom too if not for the mages, and you also become the ruler of Kirkwall too, which you need to do if you're going for achievements.
My game was a mess, it was funny though. I manged to sleep with everyone I could and they would nag at me about being unfaithful..>_>...