It can be eaten, but it will not heal any life points. The message "Eugh! It tastes horrible, and stains your fingers black." appears when eaten. This does not bear any negative side effects. The reason for this may be to give players a hint at the mushroom's intended purpose as a dye.
The name, shape, and properties of this fungus appear to be a reference to real-world ink cap mushrooms (Coprinus sp.)which are fungi that were historically used for ink or dye, hence their name and usage in quests. They also tend to be inedible, though not usually harmful, which is why it heals no life points in game and "tastes horrible".