Also does it do damage to enemy ships in the gravity wells?
As far as I've been able to tell, yes. Although I've had a few instances where that didn't seem to be the case, and with it being as situational as it is, haven't been able to test it too many times so I'm not completely sure.
Edit: Just checked it to be certain, definitely kills ships.
Still not sure how I feel about the ability. On the one hand. having it completely dependent on having a world with some decent pop next to your target (and ideally a starbase with auxilary gov as well) makes it a bit too limited most of the time... But when you do get into the right situation it's pretty awesome..
For example, my current game has a single chokepoint between my territory and that of everyone elses, an empty system (magnetic cloud, technically but whatever). On my side of that system, it connects to two desert planets, meaning every enemy fleet attacking me has to go through that system and is consequentially subject to instant annihilation from Wail of the Sacrificed by either (or both) of those worlds.
So.. A bit lame most of the time, but pretty awesome if you can catch the bulk of an enemy fleet next to one of your high population worlds.