In the scene where Lisa is sat on the bed, hypnotized by the warlock, if you look carefully, you can see the shadows on the wall show her bowing and worshiping him.
While this is a sequel to the first two Warlock films and although physically similar in appearance to Julian Sands, the Warlock in this film is NOT the same warlock from the previous entries.
Children born with "the caul" just means the baby was born with part of the amniotic sac stuck over their face. In several American and European folkloric traditions, this was believed to be a sign of luck, magical ability, coming greatness, or power to fight evil.
A "blue moon" is just the somewhat rare occurrence of having two full moons in a month. They happen about every two and a half years. The second full moon is the blue one; it does not mean the moon appears blueish in color, which can happen when a volcano spews a lot of ash into the sky.
Fiona O'Shaughnessy's debut.