"ATTACKING MULTIPLE MONSTERS
When a hero performs an attack that targets or affects multiple monsters,
the monsters gain an additional advantage during the “Deal Damage”
step. Choose 1 monster to which you will deal damage first and resolve
the step as normal. Then halve the ≥ results (rounded up), and apply
that value to each of the additional monsters, before applying ≤. This rule
applies to attacks with Blast but also actions such as “Whirlwind,”
“Army of Death,” and Leoric of the Book’s Heroic Feat."

My group feels that with the RTL rule it makes the Fire flask search item too weak to be useful. I think it should be buffed or made exempt to the RTL rule to retain some of its usefulness. Or remove this rule. It adds extra complexity since its only when monsters get attacked so if a monster attacks a hero and get blast in some way they get full damage.

That would make it a little better, but even so the fire flask is a garbage item.

Does anyone know if the obverse is true?

If a monster attacks heroes and uses blast, is the damage halved for those not the target?

and to add a twist based on another thread... what if one of the affected figures is a monster not a hero?

It is only when a hero attacks a monster. Not when a monster attacks a hero or a monster attacks a monster.