Quelling strike doesn't specify that Magic attacks don't work, like blindside does, so I'm assuming it works with magic.

At L50 Decoy takes 280 MP. I mostly use it when I see an enemy readying a DoT spell because they last a long time and it kills my MP. That's pretty much the only time I use it, I rarely have a use for the THM spells so I never take Decoy off. Eventually if we see enemies with big-hitting AOE spells or if it is able to block some enemy skills it will become more useful.