Note: I am editing the original post questions to compile all the useful information on Blood Vengeance in a single post. For attribution, see the good folk who provided answers in the thread that follows. Any additional Q&A or revised/confirmed answers will be included in this 1st post. Thanks.
How does the Blood Vengeance [+ #] ability work?
When an attacker scores a hit on a unit with Blood Vengeance (BV), any damage that would have been inflicted on the BV unit is reflected upon the attacker if the attacker fails a Magic Resistance roll. If the attacker fails this roll, the defender with Blood Vengeance takes no damage.
What does the # indicate?
The number that follows the Blood Vengeance trait indicates the penetration bonus used to determine whether the attacker's Magic Resistance roll is successful or not.
How are certain damage effects treated when applied to BV units, such as poison, burning, or fatigue?
BV will not protect against many secondary effects, like burn or poison, and may not protect from fatigue damage. [to be confirmed]
How does this ability work when lets say you have an Angel of Fury (Blood Vengeance +2) with some form of elemental resistance like CR 100 and the Angel is struck by a Cold Bolt, which does no damage to the Angel because of the cold resistance? Is there any chance the Blood Vengeance kicks in or does it only work when the Angel actually suffers damage?
Anecdotal evidence suggests that the blood vengeance effect is triggered after a hit occurs, but before calculating the damage suffered by the BV unit. So if the attacker hits and then fails its MR, the BV effect is triggered, and whatever damage would have been applied to the BV unit (before taking into account resistances) is applied to the attacker instead. As a result, things like elemental resistance should not reduce the damage an attacker can take from BV. On the otherhand, effects that reduce the BV's unit chances of getting hit, such as etherealness, lucky or awe, will reduce the likelihood that the BV effect is triggered.
Similarly, what about the spell Mistform, which reduces most non-magical attacks to 1 point of damage. Would a creature with Blood Vengeance only reflect back 1 HP or the actual damage that would have occurred without the Mistform spell? Would a powerful blow that would normally dispel Mistform actually fail to dispel it since Blood Vengeance reflects it back on the attacker?
Based on the same theory above, Mistform should not reduce damage taken by someone who hits a BV unit.
Does it protect from paralyze? What about soul slay? Or enslavement?
Paralyze, Soul Slay, Enslave appear not to trigger BV.
Does it protect from disintegrate?
Yes
How is trample damage affected by BV?
BV does not affect trample damage.
Does it protect from ritual spells that cause damage, such as Seeking Arrow, Fires from Afar, etc.?
Yes - plz confirm.
Is Blood Vengeance penetration increased with regular penetration items like Rune Smashers?
No.
Are there any magic items that increase Blood Vengeance (as for example with Fear and a Horror Helmet)?
The Flesh Ward, a Const 8 Armor that requires B5 to forge, gives Blood Vengeance +1 to units that have no BV to begin with and a +2 bonus to units with inherent BV.
If a unit with BV casts the Blood spell Blood Vengeance, is the +# value affected by the caster's Blood skill?
No - the blood vengeance spell does not stack with existing BV, instead the caster simply casts a different spell.