edit: first writeup was a bit confusing so I will simplify the post... But I cannot simplify the poll, d'oh. Squeamish does not apply to burst, linear, cone and 0 damage cards. This is easily abused. Perhaps instead of preventing an attack, it could cancel an attack. Also it does not have a saving roll like many other handicaps. Maybe it needs a 5+ saving roll?
Squeamish is less debilitating than other handicap cards. Keep in mind that it is not tar-quality, but paper. In quickdraw, its picked as the last card and not second. It is out there with blind rage... which is probably a bad comparison... Anyway, as it should be better slightly than other handicap cards, it seems about right to me and doesn't require a flat nerf. If you're bothered by linear or burst, perhaps you'd want something like: "if any damage* done would reduce a character to <1 hp, it is set to 1 hp instead". It would prevent AoE's from killing, but not attachments like burning or lava. *damage as in lower left corner of a card, that can be modified by frenzy