Interesting, but I would personally make it location specific, rather than something that can be found anywhere. And - if for D&D - something that can cut down on required rest for magic users would not be common and worth coppers.
I do like it, but it's effects are quite significant.
An good backstory, but it only seems incidentally associated with the tavern. You put a lot of work into a backstory that currently adds little to the location apart from its name. There should perhaps be a way to tie Heathen and Sar's ghosts back into the story somehow - then that effort will have more value.
The former owner's manipulation is a good twist however.
Good writing, though the names Faith and Heathen for witches, and Wenchkeep for someone who keeps wenches is an interesting choice.