What is happening:
Exactly as the title describes. I wasn't able to test this on any of the other pets considering how hard it is to find a player with a pet.
What should be happening:
I assume the same as casting an AOE spell near any player character outside of combat—nothing.
Steps to reproduce the issue:
1.) Stand near a cat
2.) Cast an AOE spell such as Poseys and Prickleys or Candy Shower
3.) Faint about 85% of the time
Game client version:
Sept 22 OAR build
Don't know the forum name, but two other players tested it on the same cat you can see in the screenshots with the same results.
Windows 7 64 bit
Out of range of the cat:
Upon casting the same spell in range of the cat: