This is really good - I like this idea a lot. The lore is excellent and the item has a lot of potential.
My only concern is that the twist is too - fuzzy - it looks like bleed-over from lore. I guess these are _possible_ twists, with the actual twist left as an exercise for the GM.
I really, really like this. It's obvious that you put a lot of time into this sub. His physical description made me smile, and I was expecting him to be a kindly spirit -- a twist on Pinnochio, perhaps. His actual personality caught me off guard. Still, I can imagine that a party would be quite willing to help the little guy out once they learnt his history, and that could provide a whole mini-campaign arc to build around. Well done!
Woodwise was designed for a RuneQuest III campaign I ran many years ago. The sorcerer character wanted a familiar, and in RQ3, familiars can be designed in any of a million different ways. I made Woodwise to tie into an overarching plotline relating to the elves; ultimately it would be found out that there were elvish sorcerers who promoted the attack to seize the knowledge and lore of the Gray Seers, and then later fell into the study/worship of Chaos.
Woodwise's soul was the spirit of a daughter of the elf goddess Aldrya, twisted and warped through foul Chaos sorcery. I came up with a number of possible outcomes: Woodwise could become something of a rogue woodland element, supporting rebellious elves; the PCs coud end up on the run from the remaining elvish sorcerers, undying magical abominations; or, the PCs could try to restore the spirit of the daughter of Aldrya, truly an epic feat worthy of heroes.
I needed to write that better in the submission; ah well, I'll know better for next time.