General Discussion
I don't consider the '18 to dodge' as being an attack roll. Fire Ball is a special hard-to-dodge and automatic-hit attack, with a separate strike component and hard-to-dodge component. I consider it to have a penalty of -10 to dodge stacked on top of an automatic-hit of 8 (the minimum for ranged attacks). Hard to dodge energy blast attacks are frequently given a penalty to dodge (Ballistic Fire is also -10; see list at bottom). For comparing Armor Rating to Fire Ball, I would consider the Fire Ball to have an effective attack of 8 to 10, not 18. You do not get to aim Fire Ball at part of the target, it is self-directed.
The main issues here are whether armor fails to provide any protection against area-effect attacks and how much damage the armor absorbs.
I disagree that armor will provide no protection. Anyone who steps in fire with shoes on is happy they are wearing shoes, because the shoes take most or all of the damage. If you are 99% covered in hardened leather armor and quickly walk through a bonfire (6d6 damage) you will not take 6d6 damage. You might take a few damage to exposed areas (more if you chose to lie on your face in it), and some might bypass the armor as heat, but the armor will provide protection (Hollywood stuntmen rely on this all the time). Also, in the less than two seconds of a Fireball's existence, the fire cannot migrate along the gap between layers of clothing, it doesn't work that way. (I will state that prolonged damage from Fire Walls or similar attacks could be considered differently)
I think that whatever the armor absorbs should not apply to the person wearing it and vice versa. Doing otherwise creates too many balance problems with damages in the game and gives an unfair advantage to area effect attacks against people in armor. Also, if an attack creates a certain amount of damage over an area, that damage should not be effectively increased (which is what happens if you apply full damage to the target and full or partial damage to their armor as well).
I agree that some damage from instant-attacks will bypass armor, but more than half should be absorbed by full armor. (again, prolonged area affect attacks could be different)
I also agree that Natural armor rating would not fully protect against area effect attacks.
Regarding changing Fireball:
I don't think the 18-to-dodge should apply if you change the Fireball spell to have an area of effect. The Fireball spell is supposed to be an accurate, hard-to-dodge, single-target spell. Since the Level 10 Meteor spell (which hits a 40 foot radius) only has a +4 to strike and no dodge penalty for targets, an area-effect Fireball spell should be a straight attack versus dodge roll (only higher-level spells have multiple components mixed in).
For comparison purposes, here are the updated Palladium spells as found in the Book of Magic. The fire-related attack spells (invocations) do escalate quite nicely with level and have variable effects (Level-PPE).
(1-1) Blinding Flash: blinding area effect, save, no dodge
(1-2) Cloud of Smoke: impairs vision, can leave cloud
(4-8) Fireblast: 3d6, 1 foot wide, 50 feet long, normal dodge
(4-7) Fire Bolt: 4d6, +4 strike, 100ft (+5/lvl), normal dodge
(6-10) Fireball: 1d4/lvl damge, 90 feet, special 18 to dodge
(7-25) Ballistic Fire: 1d6 per missile (1 missile/level), 1000 feet, multi-target, -10 to dodge
(7-20) Fire Gout: flamethrower 6d6+1/lvl, 3 foot diameter, 30ft/lvl, -3 to dodge
(8-40) Fire Globe: napalm 5d6 + 5d6/melee for 1d4 minutes, thrown 200 feet, normal dodge
(9-40) Dragon Fire: 1d4x10, 100 feet, use twice per melee for duration, special 16 to dodge
(10-75) Meteor: 1d6x10+2/lvl, 200 feet/lvl, 40 foot radius, +4 strike, normal dodge
(11-160) Firequake: earthquake, gaseous fumes, and gouts of fire, all with separate penalties over an area
This message was last edited by the GM at 20:24, Tue 31 May 2016.