Laws are "arbitrary" in the sense that they do not have to exist. But they cannot (or at least should not) be arbitrary in the sense of being capricious, or unsupported, or undetermined, or in the sense of being subject to individual will without restriction. Because that's just plain tyranny.
Say I agree with that definition- how does that apply here? Blood magic charges aren't given to sudden and unaccountable changes of behavior: phylacteries and blood mage concerns both long standing policies. Blood mage convictions are not undetermined: accusation alone has not been sufficient proof in a number of cases, so clearly some other sort of burden of proof in quantity or believability is required. Nothing about the phylactery context is subjecting blood magic to individual will without restriction.
I could agree with you on every single thing you write here and it still not apply to the case at hand.
And that's the problem with "blood magic" and "maleficar" as terms. They're not clearly defined. Or, if they ever were, the Chantry has muddled those definitions by applying the labels capriciously to any sort of magic or mage that they do not approve of.
They're about as defined as what the Western powers use to identify their enemies in Afghanistan, which is constantly changing. I have seen 'terrorist,' 'anti-government militia,' 'insurgent', 'enemy of Afghanistan,' 'rebel', 'warlord forces,' 'foreign fighters,' 'local fighters,' 'mujaheddin,' 'jihadist,' and a personal favorite, 'military age male.' Try making a distinct definition out of that one. All of these can be used to refer to the same sort of individuals, even the 'local fighters' and 'foreign fighters' labels. (Ah, the wonderful nature of cross-border nomads.)
This isn't because it's capricious. This is because working terms are used differently than legal terms even when they're the same words, especially to the people charged with enforcement and not legal niceties. The same word has different meanings. Maleficar literally means 'one who is depraved,' a character label. Legally it means a mage using forbidden magics (which is inherently magic they do not approve of), a classification. Functionally, though? Templars use it as a synonym for 'bad mage.' Why is it bad? Well, it could be the legal part (using forbidden magics), or just the character part (hurting and/or endangering people). Both are real and legitimate meanings of the word.
As fun as it can be to try and convince soldiers to speak like lawyers regarding hybrid classifications, I'd be amused if you could figure out a way to do that. You might have better luck working to convince them to distinguish between apostates (mage outside the circle) and maleficar (bad mage). Of course, if you got me walking around a couple hundred miles a year in armor to hunt down some runaway who thinks they can be trusted outside a circle and I'd probably make an empassioned case that an apostate is already a bad mage. Grouchy feet and all that.
Blood magic has a basic and generally understood definition: mind control is bad, and cutting people to make spells more powerful is bad. The grey zone and ambiguity over blood as a spell component that our great hypocrisy amounts to is, by comparison with our hyper-legalistic system, pretty minor. Classifying pornography is a classic, but how about that good old catch-all of 'disturbing the peace,' 'obstructing an officer in his duties,' or (for you military types) 'conduct unbecoming'?
Since the Chantry itself doesn't have a clear definition of blood magic (or at least, none that they apply as rigidly as they ought), then on what basis does the Chantry, or Master Warder Z, make the claim that certain, Chantry-approved magicks, like phylacteries, do not qualify as blood magic?
By the basis of being the defining authority, of course.
I'm not clear on where you find support that the Chantry doesn't have a clear definition of blood magic- the fact that you don't know it? The existence of people who believe what Wynn does should count? If legal ambiguity is your basis, I'd hate to live in the legal tyrannies of the West. So many vague laws open to selective interpretation and implementation.