Um, yeah... all "entire battlefield" spells will hurt your troops unless they're immune
As for 500 fatigue - bear in mind that it's not, really. A mage with exactly the minimum path requirement, holding exactly 5 gems, will take 500 fatigue (capped at 200). But if the mage is holding more than 5 gems he'll use as many as he can to reduce the fatigue... which is why a mage scripted to cast a gem-using spell (like Shadow Blast, which I love) twice and given exactly the right number of gems will almost always use up all his gems at once, and not cast it again.