That said, the original "Blood Component" ability allowed the character to take damage to pay for costly material components, but was later edited to only allow as substitution for non-costly material components. I assume this is because being able to take easily-healable damage in lieu of shelling out hundreds or thousands of gold pieces per casting of a spell makes some of the more costly spells suddenly very very cheap to cast.
It's not a BAD idea. But the cost needs to remain a deterrent of spamming highly powerful spells, and damage just doesn't do that in a world where you can carry around a pile of CLW wands. Personally, I'd switch some of the levels and effects around on the ability.
Level 2: Reduce metamagic costs by taking 1 point of damage per metamagic level to be reduced (cannot reduce metamagic costs lower than 1 level per metamagic used).
Level 7: Pay for costly materials with Constitution damage, paying 1 CON for every 50gp (minimum 1).
Level 14: Pay for exp costs with Constitution drain, paying 1 CON for every 100 exp (minimum 1).