Here're the existing rules for Fire:
Flame Breath (Ballistic vs. Target Deg (recharge 5) ...
I don't particularly feel the Flame Breath card has any more "fire rules" weight than any randomly chosen Bright Order spell. Basically, it's just a dragon's version of Magic Dart. Useful if you're making a fire-using monster, but not terribly relevant to environmental effects, etc.
Stronger precedents are set by the existing fire-based Terrain cards: Burning Barge, Burning City, Burning Building, and possibly Lava Flow (but that last step is a doozy). On my way out the door right now, so only time for fast paraphrase:
Burning Barge: 1 Fatigue at end of turn, and if you roll 1 Bane. If you are fatigued at end of turn, suffer 1 wound instead.
Burning City: Chaos Star = 1 stress and 1 fatigue.
Burning Building: Resilience vs 2 Purple or suffer 1 fatigue each turn. Eventually upgrades (via progress tracker) to 3 dice and 1 wound instead of fatigue.
Lava Flow: Gain the Scorched Condition until you move away. Chaos Star: Coordination vs 2 Purple or you die. 2 Chaos Stars = Auto-Death. Seriously.
Scorched Condition: End of turn, gain 1 Fatigue. If you are Fatigued, gain 1 wound instead.
Having seem these various rules side by side, I've come up with a consistent way to rule fire hazards/damage, that will fit nicely with my Environment Damage house-rules.
The criteria below assumes the PCs aren't taking direct damage from a fire as of yet, but are navigating an area that is ON fire (a city, building, forest, etc). If a PC actually falls into fire, or is otherwise directly wounded by fire, then the Environmental Damage rules kick in.
Intensity/Size/Proximity of Fire (i.e. how close and intense is the fire to the PC?)
Minor = roll a Chaos Star on any check = suffer 1 Stress & 1 Fatigue
Moderate = Resilience vs 2 Purple or suffer 1 Fatigue each turn
Major = Suffer 1 Fatigue at end of Turn. If you are Fatigued, suffer 1 Wound instead.
Environmental Fire Damage Severity (i.e. how long has the PC been exposed to direct flames?)
Exposed to flames for 1 round (1st degree burns) = 2d
Exposed to flames for 2 rounds (2nd degree burns) = 3d
Exposed to flames for 3+ rounds (3rd degree burns) = 4d
etc, until the PC is a charred corpse.
If the PC takes damage from fire (falls into a fire, has fire/flaming oil thrown at him, etc):
Roll a # of Challenge Dice = to the fire's Severity (see table above)
Suffer a # of Wounds = the Fire Severity
Challenge = Suffer an additional Wound
Bane x2 = Suffer 1 Fatigue
Chaos Star = Suffer an additional Critical Wound
Note: Also, PCs ALWAYS take a minimum of 1 Wound of Environmental Damage, regarless of Soak. When damaged by fire, Toughness may Soak Wounds, but armor does not.
Example: A Roadwarden PC has entered a burning coaching house to save a small child, as soon as he enters the building, which is already half engulfed in flames, the GM rules that this is a Moderate fire that will become a Major fire in three rounds (using a progress tracker to track the intensity), and that the PC must make an immediate Average(2d) Resilience check. The Roadwarden does so and fails, suffering 1 Fatigue. He will continue to suffer Fatigue each turn unless he passes his Resilience check next turn or leaves the building.
Two turns later the Roadwarden has reached the child and having wrapped her in blanket is heading for the door when he tries to kick in a flaming door and rolls a Chaos Star. The GM says that a loose piece of flaming door frame falls and hits the Roardwarden on the back, causing 2d of Environmental Damage. The PC rolls 2 Challenge dice and spending a Fortune Point, a Fortune Die as well. His results are: 3 Challenge, and 2 Banes. That's a total of 5 Wounds and 1 Fatigue, though the PC has a Toughness of 3 so he soaks 3 Wounds and takes 2 Wounds and 1 Fatigue.
He gets out of the buidling before the end of the third round so only takes an additional 2 Fatigue.