[thejeff]

Handled differently, I think. The targeting may just try every unit within range. Or maybe a random subset.
The evaluation distinguishes. For damage spells, I believe, damage done to the enemy boosts the score and damage done to your own reduces it.
So, in most cases it doesn't matter who the actual target is. What matters is who is affected. It won't target clumps of your troops with damage spells because that isn't effective. Many of your own get hurt and few or no enemies.

Much of this is guess work. I can see in the debug log that it does target units from both sides. I can see that an evaluation is done. I don't know how it picks the targets to try or what factors into the evaluation. It does look to me as if something is sketchy in the blessing evaluation, but I don't know enough of the details to say.

It would be easy to mod a workaround for this. Just add a H1 Self-Bless spell with AoE 1. Or change the current H1 Bless to AoE 1, but that would make it much harder for nations with only H1 priests to use sacred troops. I'd like to see the Self-Bless added to CBM.

BTW: one quick caution on casting bless twice to avoid this. If the first one works, the AI will choose another spell to cast. Most of the time this will just be some added fatigue, which is still can be problematic for a SC/thug, but I've also had calamities like shockwave thugs casting Ironskin.