The damage it does to undead, its considered Fire correct? Meaning it would be increasable with Augmented Flames in the Destruction tree?

If the above holds true, does Dawnbreaker's "Meridia's Light" spell increase with the Fire enchanter perk?

Don't think so; its one of the crappiest spells anyway.

It seems to have an effect called "Bane of the Undead 50pts" which isn't destruction.