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Red dialogue lines? The ones marked in red? Have you ever wondered why they are marked that way? Wait, I get it. The blue ones are a compromise, while the red ones are sometimes a loud "FOR THE FAITH!" and the killing of a vile heretic. Is that what you meant?
Harsh dialogue lines. Even the manual explains what each symbol means.
Blood magic is just like any other magic, only much more powerful. Magic is a tool that can be used for the common good. Orsino was unaware of Quentin's madness and believed he was helping him regain lost knowledge, which could prove useful. Considering that during the dialogue, Quentin wasn't frothing at the mouth, rolling his eyes, and, in general, managed to lure several women into a trap without attracting too much attention, it's hardly fair to accuse Orsino of being oblivious, let alone stupid.
Blood magic stems from communicating with demons, and there is a high risk of becoming possessed. Orsino knew that Quentin was insane, but he was afraid to tell anyone (Orsino himself says this, and he knew that Quentin was killing people). Quentin lured women using blood magic; this is clear if you read the dialogues.