I try to use him as little as I can, but was just wondering. He says to use him sparingly. Do you get a worse ending or something for abusing the hints?

Nope, no penalty at all. There's only one ending to Phantasmagoria but lots of optional content dotted throughout the game

When he says "Too many hints can spoil the game," he means that you will have no fun playing the game if you just use him all the time and don't try to solve the puzzles yourself. That's how adventure games work. Solve as many puzzles as you can for yourself and don't use any hints unless you have been stuck for days.