Actually, this is why I recommend a really rocking collision system.
Yes, the ability to damage allies with AoE abilities adds an extra layer of complexity, with the cost being the being the direct hindrance of your allies.
I don't know about you, but I don't think a well practiced wizard who cooperates with his team mates could ever be called a "Hindrance". People who caste black tentacles on top of the tank are hindrances, but decent players are not.
EDIT:
I'm going to use an old cliche and say that with great power comes great responsibility. The management of a caster's power and the potential for undesirable consequences for spells is part of what balances casters versus martial characters. If spells like mass hold person, mass contagion, mass inflict wounds, fireball, entangle, etc. could be used with utter impunity all the time, two things would happen:
1) A huge chunk of battle tactics would be chucked out the window.
2) Wizards would have to be redesigned and rebalanced, with the wheel essentially being reinvented.
Consider AOE spells as nuclear weapons. They helped the US defeat Japan much faster, but the US military would have been much less likely to use them on American soil. I WONDER WHY. Anyway, despite the indiscriminate nature of bombs and explosives of all kinds, they have been a staple of warfare for a very long time. A well oiled military machine will just, you know, try to aim them away from the friendlies.
How many AoE spells are in PFO?
When people start talking about friendly fire, all I can really think of is fireball... and delayed blast fireball. I'm sure the clerics have flame strike and druids have storm of vengeance, but for the most part, all the other "AoE" spells typically target allies OR enemies within range (so healing spells would only heal allies and damaging spells would only target enemies). I think someone mentioned black tentacles, and I'm sure a number of illusion spells like illusory terrain would target everybody regardless of being friend or foe, but what else? Cone of cold? Any effect that has a line or cone area?
The point is, there are hundreds of spells in the game, but only a minority of them will have to be managed because of AoE.
Still, being this is a friendly fire thread, I suppose I'll put my two cents in.
In EVE they have AoE effects called smart bombs. A radius burst of damage to anyone (and anything) that gets in range of it. You learn to either not use it near friendly characters (or asteroids) or you don't use it at all. I believe casters will police themselves and not use AoE effects in cities or other civilized areas, and will use caution when using such power in the wilds with allies nearby.
A means of assisting casters in this regard could be using targeting zones instead of directly targeting an opponent. This way, they can set the area of effect to enhance the tactical use of their spells. Additionally, you could grant allied individuals (those in the caster's party) evasion (or improved evasion if they already possess evasion) against the allied caster's spells.
Just a thought.
I am certain that with player perks that are granted as a wizard levels, AoE will be one of the things that can be added to spells not normally AoE. Like an AoE mount spell. Or an AoE true strike. Or course, the problem with AoE spells like that is that they are fairly indiscriminate, affecting all in range equally, friend or enemy alike. So when a cleric channels positive energy to heal allies in a group instead of using a directed spell specifically stating allies only, all creatures within the radius get hit with that energy, not just allies. Damage spells aren't the only thing that should be carefully managed.
The challenge level of the game would increase in a good way if people had to think before they cast spells that simply target an area. Grease for instance hits everyone, so does web. Even the write up of those spells state that. No bonus to evade for friendlies just because they are friendlies. Let's try to move away from simplistic combat, and advance the mind.