Is "where is the bleeding?" also a valid translation here?
I would say yes.
can it be also read as 'was it bleeding?'
No, "var" in this case translates to "where". "Was is bleeding?" would be "blödde det?".
Would it also be possible to ask "Var bloder det från? " or would that change the meaning?
You could say that, but it would likely be redundant. No change in meaning though.