I have a similar build for my Dragonborn Starlock (Intimidate 15 at 1st level without magic items, with a potential daily +5 from Feverish Certainty of Caiphon, IMO the most stylish utility power in the game; could be an encounter +5 instead using a different L2 utility, but then I wouldn't get this crazed glare in my eyes and begin performing whatever skill it is in a manner which is simultaneously effective and yet alien and inhuman).
And we are all fine with the ability exactly as written. Because in actual play, it simply feels unwise to actually be totally focused on it; it's simply kept in reserve as a slightly-more-than-once-per-encounter technique. You've gotta have something to do before things get all bloodied all over; in both the OP's post and mine, that's inflicting pretty solid striker damage, call it 90% optimized instead of 100% to make room for the Intimidate toys. Then you get into a real fight and it often happens that enemy A might be bloodied, maybe even enemy B as well, but it's enemy C who's managed to get our Wizard into melee who's the immediate concern. Sometimes it feels worth spending my standard action to try and take out A and B, sometimes it's not.
So I end up using it, I'd guess, about every other fight. And the individual skirmishes it ends are usually ones that we're ever so slightly tired of fighting anyway (or perhaps more accurately, that have lost their initial "cool!" factor), and we're ready to move on to a new and different tactical situation. With the -10 modifier, the binary nature of it is annoying (because it's so all-or-nothing) but neither over- nor under-powered in my experience.
So - is it a good mechanic? Yes. It's honestly quite balanced by the existence of that nasty -10 penalty (not uncommonly -15 due to language). Is it optimally designed? No. Not working on minions (who ought to be the easiest targets for it), all-or-nothing results, and the screwed up setup for the nonhostile targets... all seem like things which deserve a better design. Which I've been working on, here and there. But from experience with an Intimidate-focused character in actual play, I'm designing it with an eye to baselining it about where it is now.
(A funny story about the nonhostile targets... our most recent battle with that character was one where some dwarves and an elemental were fighting against some kobolds and a white dragon. We'd had not-adversarial discussions with both groups, and were basically being presented by our GM with the challenge: "Pick one side, or the other... or decide to take them both out (which we did)... but you can't stay neutral." It was a cool setup. But the Inimidate rules kicked in at that point... by the time we'd established the full situation, some of both sides had become bloodied due to the skirmishing. Yet they both trusted me, still. So... no -10 for being hostile. "What are you people doing? Throw down your swords!" ... dice hit the table, and due to pure dice luck all three bloodied kobolds hear it and freak out, while both bloodied dwarves shoot me an irritated glance and go back to killing kobolds. Powerful? Maybe. Dumb (the not-hostile-therefore-easier part)? Yes. But nonetheless memorable.)
To keep it simple, I think the binary nature is actually the last thing I'd fix. But ditch the "-10 for hostile" thing. Call that -10 for standard monsters; make it -12 for elites and -15 for solos. Minions are "bloodied" when they're down to half the original batch of minions; against minions it's -7. The -5 for no shared language stands.
Typical situational modifiers (+2 to -2) include if there's a surviving monster with the "Leader" subrole and comparable level to the target, or if more than half of the enemy are already down or fled (prorated by XP value, as roughly eyeballed by the DM), or if the encounter is Easy (level N-1 to N) or Hard (level N+3 or above). Even if the DM feels "no way, he really wouldn't back down" he should restrict himself to using the -2 situational modifier in most circumstances; remember that if the PC has a decent chance of this then they're almost certainly running some kind of supernatural assistance to their fearsomeness.
Oh, and... I also use it against my PCs. If they RP it well, either dropping weapons and trying to surrender or else fleeing without regard for tactics, then I'll usually let them come back in after a round or two. If they don't play it out, then the rule stands. I won't use it in situations where it would totally kill their fun, and in general the fun-killing is quite counterbalanced by the fun of playing a different set of actions in combat (fleeing isn't normally part of their repertoire), aided by DM roleplaying of the monsters doing the intimidating.
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However...
In no wise should you ever present your DM with a build and say "this is how it works, period." The fact that you can even consider making that comment would cause me as a DM to disqualify the build on the spot. Something like "it feels like a reasonable build, given that it's normally out of the question for most characters to pull off, and here are some intelligently written forum comments supporting my position"... that, absolutely. I'd be happy to listen to. So just watch your approach to your DM, dude - it sounds like mostly you know that, but just in case you missed it, that was a big red warning flag you threw up earlier.
And mention to him that there's nothing in the rules saying he can't use it on PCs, either... and that at least one poster has done so, to fun effect. It's not as invasive of player autonomy as the knee-jerk reaction suggests, it's actually rather fun.
