Ah yes, the eternal argument of "known variable good, unknown variable bad". Even if we assume that "Mathilde's Death Fog" is less damaging than Pit of Shades, the fact is that if you gather enough Ulgu in one place then no matter what the spell is, a lot of people are going to die, and thanks to our staff one of those people won't be us as long as it is a mist based spell.
As a general rule, Battle Magic is never safe to cast, but the Staff of Mistery's specific rule of "downgrading" the difficulty of spells trumps that, and I don't think it's a good idea to disregard that just because it might be less deadly.