This is a fascinating topic and glad to see it back up!
Actually seeing the bit about the pennons purpose being for soaking up blood seems kind of like so many other 'explanations' for features on weapons in the eventual 'lore' that evolves.
Interesting that the source for this is said to come from RCMP history. I recall many years ago seeing one of their music parade events with laces drill...it was spectacular. These forces are in themselves most impressive and quite historically profound.
However it seems that they really never used the lance but for performances from c. 1870s and to notably impress American Indian tribes etc. They may have had some use in WWI, but while the unit was certainly there, unclear on how much use the lance had.
In my opinion, the 'blood' element may well have come from the long tradition of the British 16th Lancers, who fought Sikh forces at Aliwal in 1846. Apparently after the battle the pennons of the lances were so blood soaked and encrusted, that the regiment traditionally crimped their pennons 16 times, in remembrance of that terrible battle.
It seems that the Canadians adopted the crimping of the pennons as they took to use of the lance in 1870s and later Queen Victoria took exception to their use of that feature in the pennons. Perhaps there had been some earlier connection between the 16th and the 5th who later formed part of the Canadian brigade in WWI as they were amalgamated together in 1922.
Whatever the case, the blood soaked pennons of Aliwal may be the source of this notion.
In actuality, the pennon has been suggested as more regimentally symbolic and for parade type purposes than such matters. In WWI, the German lancers left their pennons off during battle.
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