havent read the whole thread because after a point it simply derailed to personal attacks, but at least in my games i would rule that "touches" does include you being in touch with him, regardless who the initiator of said touch was.
as for mechanics, like most ongoing damage effects, i would limit it to once per round when the touch is initiated or mainted and be done with it.
to me, using the example of the familiar a few posts up, it makes no difference if a crow flies on your shoulder or if you pick it up with your hands and put it in your shoulder, if the shoulder is flaming, it gets damaged either way.
