Here is a list of npcs i tested the ebony blade on for upgrading it (10 kills for full upgrade). This list doesn't contain any major shop owners or companions. All of these characters are basically useless after you have completed their quest/task, and the interesting thing about it is that some of them aren't questgivers nor do they have any tasks that directly involve them. Most people have been saying that you have to kill someone who is a companion or who you've done a task for, but i haven't found this to be the case (unless my game is glitched). It is possible that doing quests to help out towns (such as tasks to become thane) or certain groups seem to gain ppls loyalty and allow you to use them to upgrade the ebony blade...

Dawnstar:
Seren (blacksmith's wife)
Captain Wayfinder (ship captain)
Fruki (mineworker)

Dragon Bridge:
Varnius Junius (check in tavern/inn)
Azzada Lylvieve (resident)

Falkreath:
Thadgeir (check in tavern/inn)
Kust (check by graveyard)

Ivarstead:
Temba Wide-Arm (check in tavern/inn)

Karthwasten:
Ainethach (landowner)

Markarth:
Kerah (stand owner)
Degain (beggar)
Omlung (smelter)

Morthal:
Hroggar (mill worker)

Riften:
Edda (beggar)
Marise Aravel (resident)
Romlyn Dreth (black briar meadary)
Wujeeta (skooma addict)

Riverwood:
Camila Valerius (shopkeeper's sister)
Sigrid (blacksmith's wife)
Gerdur (mill owner)
Faendal (if you don't side with him in his quest you can't use him as a companion)

Solitude:
Sorex Vinius (check tavern/inn)
Evette San (spiced wine stand owner)
Octieve San (drunk/evette's father)
Addvar (fish stand owner)
Silana Petreia (priestess)
Erikur (blue palace thane) *do not kill before completeing thieves guild special job "Dainty Sload"
Bryling (blue palace thane)

Whiterun:
Brenuin (beggar)
Ahlam (resident)
Armen (resident)
Carlotta Valentia (stand owner)
Jon Battle-Born (resident)
Idolaf Battle-Born (resident)
Saadia (tavern maid)
Mikael (tavern bard)

Windhelm: (I would advise against killing anyone until after you complete Blood on the Ice)
Hermir Stong-Heart (blacksmith's assisstant)
Hillevi Cruel-Sea (vegetable stand owner)
Aval Atheron (meat stand owner)
Angrenor Once-Honored (residen/beggar)
Viola Giordano (resident)
Malthyl Elenil (New Gnisis Corner)
Adonato Leotelli (writer, check in tavern/inn)
Torbjorn Shatter-Shield (resident)

Winterhold:
Haran (check in tavern/inn)

I heard about dark brotherhood initiate(s)? does it work? Good topic btw

Pretty sure the daedra is tricking you. Nothing good happens if you go killing with the sword. You have been manipulated

That's not strictly true. The ebony blade starts out with a leech health (10) enchantment, and then for every 2 people you kill it increases, untill it reaches 30.