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The temptation to use power is great :D

All is not lost though: before talking to Ilmari to begin the finale all the ambushes in the game will reset every night. Since the max level is 8 it’ll be possible to grind Raedwulf up to a level playing field. The mine is probably the best place to grind up levels this way. Good luck!

Well, I have used POKE :). But anyway, I'll go through the game again.

I think I am still missing something. I got the pouch, but I don't know what it's good for. And in your animated GIF can I see some red stone? Where it can be obtained?

POKE is much faster :)

The pouch of monkshood keeps the werewulf from going wild and attacking the party (the shepherd said it keeps them at bay).

The stone is in the NW corner of the forest inside the old hut, it glows in the dark near ghosts and reveals them. It's not necessary to get but may have helped navigate the haunted moors. A villager should drop a hint about it.