(My final refrain on the subject)
Duende,
The real reason for the bloodgroove is to stiffen the blade. It may seem odd that removing material from a blade can make it stiffer, but the basic physics can be demonstrated with a piece of paper: A carefully fanfolded paper sheet can stand on edge and balance a plate on top. A bloodgroove in a blade supports the narrower tip area with the same principle (well mostly, but that gives an idea).
How the bloodgroove received its nickname was because of three factors: 1) During initial manufacture, the groove was not forged or polished well (either a time, quality, or skill/tool factor). making a rough surface. 2) The "capilary action" of blood would fill the rough groove, turning it red. 3) The groove is inherently harder to keep clean. [An alternative: It just rusted itself red.
]
Soldiers and the local bad guys come back from a skirmish, have a few drinks, and: Voila! The folklore of the bloodgroove is born. The folklore around the bloodgroove is found in most cultures, not just Southern China.
Still, a bloodgroove on a weapon as short as a BaatChamDo does not stiffen the blade to any practical extent! So why is it found on there? Its purpose is decorative. It is most likely an historical signature of the sword making specialty of the bladesmiths. In my opinion, this gives credence to the claim that the BaatChamDo is decended from a shortened sword design (a broken scimitar?), not from an elongated knife.
A good bladesmith is just one of the many people from entirely separate fields who can independently either verify or completely refute what I just wrote. But, hey: I'm not one to suggest facts should stand in the way of a good story. So, don't believe me, either. I might be playing a trick, too. If anyone is inclined, go and find out. The nature of true science is that it begs to be proven right or wrong.