[Huinesoron]

Okay, first thought is Beleg to Turin, but that's definitely wrong, because 'no life was lost'. With that out of the way...

'Second House' could mean several things:

-Second House of the Edain, ie the Haladin. That would probably put us in the Turin story.
-Second tribe of the Eldar, ie the Noldor. The speaker would probably be a Sinda.
-Secondborn, implying that the speaker is an Elf.

'The gift I gave thee' sounds like a weapon. The context suggests it involves fire; how many flaming swords are there? Mm... yeah, it's Anglachel and Anguirel, isn't it? But the only time either of them was given as a gift was by Thingol to Beleg, and Beleg isn't of the Second House of anything.

Life wasn't lost, but a price was paid - for the gift? For the power? For friendship? What could the price be?

Circling back to the first point - could we be in the Wanderings of Hurin? That certainly meets the 'obscure' standard... except it would be the recipient who was obscure. Hurin himself is anything but.

Hmm... jumping tracks completely, could this be Cirdan to Gandalf?

You are of the second house - Gandalf is of the Maiar, the lesser 'house' of the Ainur
I am your ally and your friend - Cirdan befriends Gandalf pretty much instantly.
And even when I am away
By your side I still would stand - See below.

When the soldiers of evil come
And try to bring forth the flame - 'A balrog! A balrog is come!'
The gift I gave thee shall awaken - Narya, the Ring of Fire, given by Cirdan to Gandalf.
To beat them at their own game - Gandalf makes excellent use of fire, potentially charged by his Ring.

But any power comes with a cost
And so it has happened this time
For even though no life was lost
The price paid hurts all the same. - 'I have written Gandalf is here in signs that all can read from Rivendell to the mouths of Anduin'. Gandalf's use of fire always ran the risk of identifying him. Moreover, his confrontation with the Balrog, while not losing his life, still took him from the Fellowship at a critical time.

hS