Its not really an enhancement bonus. It boosts damage and if the weapon isn't already +1 and thus treated as magic it will make the weapon count as magical for the purpose of bypassing DR.
The damage bonus will stack with existing enhancement though yes.
It isnt a +1 weapon. It counts as magic and gets a +1 (or higher) untyped bonus to damage(not to attack). So it would stack with the the enhancement bonus from a +1 weapon or spells like magic weapon.