This has been discussed before, and yes it is most definitely blood.

You can actually see Scar's claws ripping into his skin. On the contrary, the lines on Simba's paws during the end battle scene are merely stretch marks, which explains a little of why he didn't yelp with pain as Mufasa did. As you can see here, Scar's claws are just stretching Simba's skin since the "scratch" lines are exactly the same color as his outline:

Poor Muffy... imagine having sharp claws dig into your flesh while the weight of your own body drags them in further.... *shudders*
