This AOE doesn't look any different form other spells that only hit every unit once, making them pointless. (oh, they are good vs. an army of 10 single spiders but...)
I think with "real AOE" he means that every person in every unit should get hit instead of the whole 20 person unit getting hit once for a then trivial amount.
The whole concept of AOE spells is based on every living (well, mobile) thing getting hit. Not 4 person units taking 1/4 of the relative damage and 20 person units taking 1/20...
That would imply that the damage per unit is multiplied by the target unit's member count. Obviously it cannot scale up "as usual" by the number of shards but needs a more timid progression. Like +4 for 4 shards instead of x 4.
And Lifesteal? What about the very first spell in CoreSpells_RUIN_Tactical.xml ?