Did Mormons practice blood atonement at one point?

Blood Atonement was never a common practice, but there is evidence that it was carried out at least once. Some modern Mormons believe in a modern interpretation of Blood Atonement - that is, that those committing serious sins will have their death brought about by God, but this is not a commonly held belief. Blood Atonement is rarely, if ever, spoken of in the sermons and lessons of the Church today.

From the Church's official website, lds.org: "At times during the [Mormon reformation of 1856-57], President [Brigham] Young, and his counselor Jedediah M. Grant, and other leaders preached with fiery rhetoric, warning against the evils of those who dissented from or opposed the Church. Drawing on Biblical passages, particularly from the Old Testament, leaders taught that some sins were so serious that the perpetrators blood would have to be shed in order to recieve forgiveness... This concept, which came to be known as blood atonement, was a stock component of anti-Mormon rhetoric in the 19th century. While many of the exaggerated claims that appeared in the popular press and anti-Mormon literature are easily disproven, it is likely that in at least one instance, a few Latter-day Saints acted on this rhetoric. Nevertheless, most Latter-day Saints seem to have recognized that the blood atonement sermons were, in the words of historian Paul Peterson, 'hyperbole or incendiary talk' that were 'likely designed to frighten church members into conforming with Latter-day Saint principles. To Saints with good intentions, they were calculated to cause alarm, introspection, and ultimately repentence. For those who refused to comply with Mormon standards, it was hoped such ominous threats would hasten their departure from the Territory.'"

You can read some historic sermons on Blood Atonement in Journal of Discourses 4:53-54 and 7:16-21, which are available online. You might also want to read the Encyclopedia of Mormonism entry on Blood Atonement (vol 1:131), also available online.