It is difficult to interpret this as the text provides little context. Indian Mythology is very complex. Here are a few things that may help. In the Hindu mythology duality is an illusion of existence in time and space. They are in reality two aspects of one “thing”. So good and evil are not seen (mythological) as absolute moral positions but rather as different views of the same thing. So all “Gods” are represented in duality. The God of sex is the God also of death. So it is not unusual to see worshiping of what would be seen, such as by those with Western traditions, as “evil”. Tomorrow they may be at another temple worshiping this “God” in its “good” guise. These are “masks” worn by the same God.
This specific text may be relating to the autumn festival of the Dura Puja: a three day festival where nearly 1000 goat may be sacrificed along with many other animals. This is to the God Kali who is the God of death and destruction and life and creation. Before 1835 human sacrifice occurred here and else ware in honor of the God.
Three examples: In the Shiva (Shiva is Kali’s husband or father) temple in Tanjore a male child was beheaded before the altar of Shiva every Friday at the holy hour of twilight. In 1830 a petty monarch in Basar offered on one occasion 25 men to Kali in Dantesh. In the 16th century a King of Cooch Behar immolated 150 to Kali.
So the answers are: the small groups are probably those partaking in the many ritual slaughters. The blood running on the stones is the blood of the sacrifices. The temples actually have conduits to move the blood back to the land and ultimately the sea.
The sacrifice is not representing baptism per se but the concepts are strongly related. Jesus on the cross is the Christian analog to this, the “lamb (sacrifice) of the World”
The bathing reference is difficult without more context but it may be they were glad that they had bathed (purified themselves) before partaking in this solemn right.
I see nothing about blood where they are washing.
Note that they may not wear leather. The cow was the first animal that the “ineffable “became after it said “This I am”. Therefor the cow is the most sacred symbol of the “ineffable” in Hindu mythology.