That's the exact same 魔 that you found in 魔道士 which is the word used for Black Mage, White Mage, etc...In the context of Final Fantasy III, there is no sign of any "scary" connotation, especially if you consider that the "Magic Knight" used White Magic back then.
Basically, what is now called "Dark Knight" in FFIII DS, the only official translation, is a complete different job from the NES version (Probably because the "Magic Knight" was redundant with the Knight and the new Freelancer). So one can't really use that version to claim that not all past "Dark Knight" used their HP to deal damage.