It's correct to use it but it's not absolutely necessary. In fact, it might be better without it. Also, it'd be better not to repeat sword. He swung his sword lightly, (with) its tip drawing a beautiful arc in the air. He collapsed onto the ground, (with) all of his flesh and blood being drained untill 'only' a thin layer of skin was left.

For the 2nd sentence, you can also say "until all that was left, was a thin layer of skin"

Yes. Correct.

not really...