What does Baa-ram-ewe actually do?

In Babe when Babe is in the Sheepherding Competition he is unable to talk to the Sheep who act....well how we see act. this results in Rex going to Farmer Hoggett's sheep and pleading them for help. while at first they don't want to help him when he tells them that Babe is in trouble they agree to help because it's Babe and it would have been what Maa would have wanted if she was still alive.

after returning and relaying the Baa-ram-ewe chant the sheep Babe is about to heard start talking and listing to him.

I have 2 questions about this:

1. What does this chant do? Fly says sheep are stupid so does this chant give other sheep intelligence?

2. Rex had to agree to 2 things to be told the chant. the first was to treat the Sheep better and the second was to protect it from being used on any sheep (implying for Rex not to abuse it himself), to quote the Old Ewe

   But the most important of all, you must promise never ever to let this password we be about to give to be used against any sheep anywhere.

   but why would Rex need to promise this? if anything going by what we saw when Babe used it it wasn't like the Sheep's will was stolen and if dogs like Rex used it it would improve relations between Sheep and Dogs since when Babe first started herding Maa told Babe that all he (and the dogs) needed to do was just ask them (though the dogs are stubborn to admit this)