A lot of spells were not implemented in the game, which explains why you haven't found them. This thread has a list of spells that are available in 1.3.
http://www.gamebanshee.com/forums/sh...lestial+spells
Someone else may be able to comment if any have been added in 1.4.
The penalty for using items above your skill level is subtracted from several of your abilities: I think armor, parry, strike, and speed. Pull up the equip menu and the reduced stats will show up in red below the pic of your character. You might be better off with a lower level of armor; -3 seems like a lot to me, and is probably more than the armor benefit from the deathlord leggings. Crimson and guilded armor are almost as good and don't require as high a level in heavy armor.
TM