I like the story. I'm not sure how often the curse portion of the staff would be used though. I see wizards either throwing fireballs with their staffs or whacking minions as the party gets overwhelmed. Either way the curse portion wouldn't seem to come into play much ("Things were never the same for Bob the Kobold after he took a vicious swipe from that wizard")
However, those that took the time to figure out how to properly use the curse might see this pay off in a very long campaign. Interesting idea.