The book of portraiture is a quest item and has no use other than the one involved in Zogre Flesh Eaters quest, in which it provides a hint to the player. It is found, along with charcoal and a piece of papyrus, in the drawers in the room of Sithik Ints.
The book cannot be placed in a player-owned house bookshelf.
All interested artisans should really consider taking up the hobby of portraiture. To do so, one uses a piece of papyrus on the intended subject to initiate a likeness drawing activity.