There are clearly different types of lyrium - raw, corrupt raw and refined. Since the stuff we pick up and the dust is always red, the stuff in the bottles is blue and Fenris glows blue/white, I would assume that what Danarius used was liquid refined lyrium, which when applied to the skin burns and scars but if the subject survived the process, alters their relationship with the Fade. Clearly Danarius set up a sort of gladiatorial contest so the best subject would be used for his experiment - because it was probably very costly and he didn't want it wasted on an inferior slave. However, this may not have been the first time he attempted it and so he was now having to offer a boon in order to ensure that the slaves did ther best. If you know this sort of thing has happened before and the slave didn't come back, it might take the edge off your determination to win. Leto, as he was then, saw this as an opportunity to free his mother and sister - though given he lost his memories as a result, it is surprising that Danarius bothered to keep his end of the bargain. Perhaps Leto had to see them freed before he submitted to the process and it was necessary that he did it willingly for it to work. Who knows? Unless Danarius left notes or someone else figures out how to do it, the secret will have died with him.
Fenris was valuable because he was the first subject to have survived the experiment for any length of time. The longer he survived, the more valuable he became. Whether Danarius really wanted to flay his hide to use on someone else is debatable. I suppose if Fenris died fighting for his freedom, that would have been an alternative to getting him back in one piece but on the whole I think Danarius wanted him back alive so he would be guaranteed to have a pliant slave with the full abilities he had imparted to him.
Oh, and for those people who only see him as a violent, angry, beast, like Anders, as I said to him, may be you should get to know him (as a friend) and empathise with him a bit more. Those who do, like Varrick, Donnick, Averline and even Isabella, do actually start to see something of the person emerging. If you romance him, you get to see a bit more - and really good mages, like my Hawke, Bethany and Malcolm do have his respect. As he gets to meet more decent mages may be he will become less prejudiced against them but given his experiences up to now, including most of the mages we encounter in Kirkwall, it is hardly surprising that he is still generally hostile and mistrustful.