But in a nutshell – such magic duels is one the goal we are aiming for.
That much was clear from your first post, and I think it could be a very effective form of gameplay.
On the one hand, Inner Fire just seems like a classic component of an "instant death" spell combination. On the other hand, I can imagine if there is no spontaneous spell available to complete that instant death combination, it could still work out as a balanced ability. Certainly this is an extremely dangerous spell, and we'll have to wait to see how it plays out in gameplay.
That said, I'm willing to lay bets that the 470% increased vulnerability to water will need to be toned down. Even if a player has time to counter water spells before they kill him outright, the damage he takes before that could be decisive anyways. If you counter the water spell after five seconds (reasonable reaction time in a chaotic battle), it's still dealt the amount of damage it could have expected in 25 seconds. I haven't played your game, but 25 seconds of exposure to a powerful damaging spell is either lethal or crippling in most games I've played.