Tried it last night and I honestly hate it. My guy finally got cornered and beat to death by a thrall (I couldn't hit him with my red hand because he was too close and had me pinned) and I'm not sure I want to even start it up again.
What's the blue hand supposed to do again? Third person makes aiming shots neigh to impossible. Took me twenty minutes to figure out how to turn back into a human, 'z' kept doing bats. How the heck do you bite someone? The floating around is annoying and I keep getting stuck on stairs.
It just seems like I have a lot more fun just sneaking and backstabing or sniping the old fashioned way.
I already beat the MQ in the Dawnguard. Is the vamp side different enough to be worth trying?
Thanks.
Funny thing, it hit me not too long ago that 3rd person works more or less like 1st person

You see, while Yes the over all perspective changes, your targeting reticle remains at the center of the screen. So just as you would in 1st person, if you aim the reticle at your target your still going to hit him. I'm not being a smart ass, I'm just offering my input. Once I started looking at it this way, targeting in 3rd person became much more fluid.
The red in your right hand is
Blood Magic. Its an aoe health drain which does do a considerable amount of damage (if Serana isn't following you). This remains constant.
Your left hand is
Night Magic, and blue usually by default when you initially shift. This is the hand that you can change as you unlock new spells. That blue spell is Raise Dead, but only works on lower level mobs. As you get perks you'll unlock a Summon Gargoyle, Vampiric Grip, I think another Raise Dead spell that works on higher level guys (i think), and a neat Paralysis Spell that's always fun and handy when fighting groups.
Your
"shout" button by default executes your Bats ability. You can change this via the Favorites Menu to use Vampire Sight, and as you perk up you'll gain the Superior Reflexes ability.
Bites can only be done in melee. It functions much like the "kill cam" events you get when your fighting, and your last power swing turns into you cutting their head off. Instead in Lord Form you'll grab and bite them. In the beginning I had a hard time getting the timing down, but now I'm biting like crazy. FYI: expect Serana to kill half of the guys you plan to kill/bite for perk points before you can. It gets a bit annoying and tedious, but stick with it.
When you initially shift, you'll be hovering. Hit the "sneak" button and you'll drop to your feet. On your feet you'll drop the magic and enter "melee mode". If you find yourself cornered again I'd suggest doing this. While your hits are not as powerful as a Werewolf, you'll still be able to do enough significant damage. As you progress through the Vampire quests you'll gain artifacts that will help boost a few of your abilities while in Lord Form. Those coupled with your fully perked tree will make you very strong and very dangerous.
If your life is low enough that you feel like your going to loose this punching match, hit your shout button for Bats, and you should pass right through him and come together a distance behind him. I can't remember for certain if you
can pass through NPCs, since I don't use it often enough to remember, but aiming to the left or right should pass you through the gap on either side. It's a good escape tool. Not flawless, but a good one.
A few pointers: Choose your battles and run if you must, especially in the beginning. Your sprint is pretty significant so you should be able to out run most NPCs. By "choose your battles" I mean don't fight during the day unless you know you can take them, and never allow them to gain ground on you while you hoover (especially if your stuck with serana). If they get close, drop to the ground and melee. Keep moving. Swerve left and right, Werewolf tactics like circling is fairly handy...so try and fight in more-or-less open spaces, or in areas thick with obstacles you can take advantage of, like in a tree thick forest. If it's a pack of Dawnguard attacking you, watch for their crossbows (hence the swerve) and use cover while taking out their 2-handed wielder (that one smarts Dx ), then dash either close the gap with the crossbows or keep circling and casting your drain life.
If you're stuck with Serana, abuse her companionship. Draw fire from ranged while she burns them down, or let her tank the heavy hitters while you float in circles. Or, let her draw all the attention and let her soften them up, then swoop in for the kill. That's the only way I can play with her around and survive.
I thought the same as you in the beginning, but I decided to stick to it and fill out the perk tree if nothing else than for the achievement on my Xbox360. Along the way I figured out how to make the form work. Now that I'm fully perked and "trinket'd" I'm just as efficient as any Werewolf...I just have different tactics.