Wow, that is pretty great compared to Mirror Entity, and Mirror is frequently played. Mirror is terrible if they drop a small minion, and while this is not great either, I'd much rather have them take a bunch of damage and lose their minion, than me having a measly 1/1 that does nothing.
This is incredibly OP. When your opponent plays around freeze clone and they played cheap minions. Let's say a cheap minion with 1 Health. This turns into a 5 damage Fireball to the face. For just 3 mana. Diesel! And don't let there be Spell Damage on the board. Lights out! Diesel card. If only this was a Rouge card. #CoolKidsOnly
Funny thing, I might actually WANT this thing to kill a crappy small minion as a Paladin player. I take some damage, but then I know I can heal from Benevolent Djinn or Truesilver Champion and start triggering the heal effects and the potential bonuses. Problem for Paladin has been that the healing effects don't work unless you need to be healed.
Anyway, could also kill me of course, but I'm thinking out loud...