It's certainly true that the numbers that come flying up are not to be trusted. These days time to kill is as good as it gets for these types of comparisons.
I measured this by looking at the red text damage numbers and comparing the two tests. They had an identical range of attack numbers, so I gathered that the ability is not working properly.
Those numbers are inaccurate. It's possible that the ability does work, but its boosts are not accounted for by the displayed damage values.
I would have to disagree slightly. I think that the damage numbers are the representation of how much damage you are doing with an attack, and it can be linked directly to the damage displayed on your skill tree. However, the red text number and the damage applied to an enemies health bar do not align and go both over and under so I can see how you would say TTK is the best comparison. Perhaps it needs further testing but I believe that seeing the damage numbers not change the range of values at all when it should increase by 25% is enough to conclude that it isn't functioning properly.
I went ahead and tested TTK on Jimmy Legs with only using the staff of lava and flaming skull both with and without rank 5 spirit mastery and I found that without it I could get a kill in 47-57 seconds after about 10 kills. After another 10 or so kills while using rank 5 spirit mastery I found I could get a kill in 42-57 seconds. With more testing I think I could have gotten a 42 second kill (basically one less flaming skull hit) without spirit mastery, but if spirit mastery does in fact increase my damage by 25% then I should not have been able to have an equal maximum kill time.
I don't believe curse is working across many items either. Imagine it will work out.