Oops typo left out the part about it being your site fortress or artifact 
thanks for catching that.
Hmm, definitely more balanced, but the fact that it's not a "may" ability is somewhat troubling. That might make him enough of a liability to make him unused for defense, not to mention your opponent could CtB him to make you toast a Fort, Art, or Site when you don't want a side battle.
Before you posted the change, I was thinking something like this:
"Force two human Characters to fight each other. The owner(s) of the losing character(s) must discard a Fortress or Occupied Site from territory. Following that battle, remove this card from the game to shuffle all Lost Souls in play into owner's draw piles."
That way, if you cause a side battle where you want initiative to play a bunch of nasty stuff to do whatever, there's a good chance you'll lose a Fort or Site. You can still get rid of an opponent's Fort or Site, but it takes a bit more cunning. Also, War also results in casualties among more than those fighting, so I think shuffling Lost Souls is also accurate.
So the fact that he can only be used once without some tricky maneuvering makes it balanced, but the "auto-block" part of his ability is nice, but also balanced, since it shuffles all LS's in play, not just yours. And the "auto-blockness" is tempered by the fact that he is multi-color, so only one per deck is allowed.
