If someone feeds his animal companion the Blood of Baphomet does it remain his AC after being turned into a magical beast?
Here you can find the man-eating animal template.
Yes, but it might have some repercussions on his alignment, if he's a druid or other alignment-based class. Knowingly feeding your animal companion this stuff is very chaotic evil, and even if its not enough to shift and lose class features, the animal companion is now a chaotic evil entity with new-found intelligence to boot.
It would be a pretty reasonable fix if you don't want the animal companion to be this overpowered to have the former animal try and murder the rest of the party and anyone else it comes across, though it probably wouldn't strike first against its master.