Bloodlust only restores your health when you hit a living target with the wrench, hitting corpses and objects will not restore any health.
The healing provided by Bloodlust is a flat rate per-hit, the damage that you do to the target does not factor into how much health is restored.
The finishing blow on a target will not restore any health, this can actually result in Bloodlust being less effective when paired with multiple power-enhancing tonics such as Wrench Jockey or when used on the Easy difficulty setting.
Bloodlust synergizes extremely well with the SportBoost series of Gene Tonics due to the increased wrench swing speed.
Bloodlust can be an effective strategy against Big Daddies on the Easy difficulty setting, but it tends to be suicide on higher difficulty settings.