[dogscoff]

Yes, 'bloody' is one of the older, milder British swear words, although it can be used politely when describing something that is covered in, or results in, a lot of blood or bloodshed (ie a bloody battle is not swearing, but a bloody mess might or might not be, depending on whether or not the mess in question is actually splashed with the red stuff.)

According to my Concise Oxford Dictionary, it stems from the "bloods", an old way of describing the aristocracy. To be "Bloody drunk" was to be as "drunk as a Blood" or "as a drunk as a lord".