For the others of you who are voting 5's and not commenting, shame on you. If it's that good, you should leave a comment, even just "Wow".
Seriously though, this is a great item with a great story. It's almost too much story. Almost. I almost voted 4 because the sword is more like a plot device than a weapon, just something to move the story along than an item with it's own worth, but it's a really good story.
A bit munchkin. A vampire with one of these looses any villian background and becomes a superpowered junkie. Pouring out lava, acid, or molten gold is way too powerful. Imagine a never ending canteen of spider poision. Yikes!
If it was limited to potable fluids, juices, wines, milk and of course, water, it would be less over powerful.
You could balance it by letting each user only have access to a limited portion each day. Say about 3 gallons of whatever's inside. It's still never ending, because you can pour out more tomorrow, and you'll have enough to survive if it's water, but it won't be an instant artificial volcano.
Brace canteen in place, top down, un cork, vacate premisies. Go to Comment
This is another take on the Wand of Wonder, as mentioned but with the nice backstory, I would use this rather than the regular wand. Sometimes a new take yeilds new ideas, like The Deck of Fate, but this one is the same as any other.
The accepted mode of getting otherwise unobtainable information is to go visit the cranky old hermit living in the mountains. It's just the sensible thing to do. So, naturally, everyone takes their monthly excursion to the hermit's hovel to consult him on everything, from lock-jaw to lovesickness, necromancers to nasal viruses.
Now, if everyone's always visiting the poor old hermit, there's going to be an enormous queue... "Wellcome to the Hermitt's Hovele, Please Take Ye a Number and Have Ye a Seate" reads the sign outside the packed dwelling.
Imagine the poor hermit, having retreated into the mountains to escape this precise situation...