This shout works on any dead ally on your radar, whether they are in your party or not.
Minion deaths do count towards the total number of allies, but only for an extremely brief period of time. The exception to this is the Flesh Golem, who will count as an ally until its corpse dissipates.
Spirits will not trigger "I Will Avenge You!", even when used immediately after their death.
This skill can shine in Alliance Battles, where potential amounts of dead allies can easily match the shout's recharge length.
Anomaly! This skill has radar range, not infinite as the description implies.