It works on Psyfiend and Mindbender/Shadowfiend. I don't know if this is intended, but as a shadow priest I am loving it in duels and in PvP. While most people expect an infinite self healing when facing a shadow priest, no one really expects you to dish out a lay on hands-ish spell out of nowhere.
Do you think it is intended? It seems quite broken to be honest.
I don't think it was intended from a developmental standpoint. I think it was accidentally made possible by a programmer who didn't understand what it would do.