same as you basicly uses what you are useing whan cast, uses your currently active skills same level last I tested (a long time ago). Better control if you have a specific skill you want cast but poorer overall.
2 point MB and you master will high level MB like crazy though.
Kuafa's got it right- Shadow Skills are 1/3(Shadow Level) + 1/2(actual skill level). That also includes +skills- so if you have a slvl 30 Shadow Warrior and a slvl 20 Fade after +skills, then when your Shadow Warrior casts Fade she'll cast it at slvl 20 (1/3 of 30, plus 1/2 of 20).
Another key point to make is that Shadows can SYNERGIZE their skills. Whenever they use a skill, that skill will then count as a synergy. For instance, if you get your Shadow to cast a slvl 30 Lightning Sentry, and then you get her to cast a slvl 30 Death Sentry, the Death Sentry will be synergized by a slvl 30 Lightning Sentry (yes, Shadow synergies can exceed 20 points). Then, if you go back to the Lightning Sentry, it will be more powerful this time because it will now be synergized by a slvl 30 Death Sentry. This means if you have a Shadow Warrior and a lot of +skills, you might as well invest a single point in skills like WoI or WoF and get your Shadow Warrior to cast them each once when you first summon her, because they'll add a lot of damage to her Fireblast.
Because Shadow Synergies aren't capped, Shadows can actually cast the most damaging traps in the entire game. I forget exact numbers, but I recall calculating that Shadow Warriors can cast 25,000+ damage Fire Blasts with some high-end gear. Too bad you can't teach her to aim them properly...