Turns out, this spell isn't so safe for companions. NPCs still consider this spell effect as offensive magic, so they'll get aggressive on the player if they are hit with it. NPCs also can't use the spell, unless you enchant it on a weapon for them.
If you're wondering how this works, all it really does is that the script on the undead creature checks for the turn undead effect, and then checks to see how much the flee AI value changed to apply damage, since turn undead is checked against magicka resistance, and increases the flee AI one point per point of magnitude. It was a perfect way to gauge spell strength for this effect. Plus it doesn't change the flee aspect either, so it's more of a bonus than an outright replacement of the spell effect.