I was looking at the "blinding gaze" spell which does 5+WP damage and I thought, is this treated as normal damage? In other words, is the damage reduced by Soak+Toughness? I assume the answer is "yes" because otherwise apprentice wizards would be doing some serious damage, but just wanted to check...

Unless otherwise stated on the card, Armour+T is always subtracted from the damage potential. There are some spells that can ignore armour, I don't remember at the top of my head if this is one of them. I don't think there is any way of doing damage that ignores the Toughness, but I might be wrong.

Flavour-wise I might let the spell ignore armour anyway if it makes for a good story (e.g. heating up the plate armour of a chaosknight and causing pain). But in that case it would have to be at the initiative by the player and roleplayed.

If it ignores 'Damage Reduction', the card states that it causes 'Wounds' rather than 'Damage'.

Example for causing wounds: Burning Blood