Phasic Challenge is a new spell from the Magic Tactics Toolbox that makes it so two targets can interact with each other, and only each other, with attacks, spells and effects. The targets are essentially removed from reality, though both targets remain
visible and audible, and can see and hear other creatures. They literally cannot physically interact with any other creatures at all. However, they can still effect terrain with their spells or actions.
The intent for the spell was clearly to make for one on one battles between the two targets. However, there's nothing in the spell specifically stating that one of the targets has to be an enemy.
So...how do we best break this broken spell? You essentially have a 1 round/level "god mode" for two characters that can't be interacted with, but they can still effect the terrain around you.
What spells, items, abilities, etc. might best help you destroy your enemies indirectly?
It's high level, right, about 8?
I would think you could combo it with stuff like Reverse Gravity, Etheric Shards, or whatever the Void kineticist gravity ability is to pull people into Prismatic Walls. Polar Midnight is a good one if you can prevent movement some other way. One target of the Phasic Challenge sets up the pull effect, the other the killer effect for maximum action efficiency.
You could also use it as a poor man's Time Stop to buff. Pro: It lets two members of the party do this with invulnerability and longer duration. Big con: it leaves the enemy alone to do their own prep, as well as attack any other party members.
Control Winds; tornadoes are fun.
Wall spells in general, if the enemy can't teleport.
Enough illusions to drive an inevitable to drink.
I could see it being fun (if not necessarily broken) for a pair of casters with access to a lot of combat buffs that they could spend the time slapping on each other and/or themselves without being messed with by enemies. You could even fluff it up as some fancy anime/Wonder Twins transformation sequence.