It's actually funny you should mention this particular example because this has been asked of Fred. His response was that yes, you can use ongoing/environmental damage to represent that, but it's boring and not remotely the way he would do it. It has a mechanical effect (which only serves to put a time limit on an encounter) but no relevance to the narrative at all. However if you use an aspect it's dynamic, capable of many many things (falling debris, heat, damage, forced movement, tactical considerations, etc) but most importantly it's relevant to the narrative. The story changes because someone has to react to the fire, or the fire narrows (or creates) options. Additionally it's not all encompassing. Sometimes the hero's not on fire. When we read and write stories how often is someone in a burning building and then doesn't burn to death (or even get burned). Regularly. Having an aspect means that it can effect the outcome, however sometimes it also doesn't, and you can't say that of ongoing/environmental damage (well, I suppose you can, but it's not as intrinsic to the concept).
Yes, but none of this helps the many people I've seen who want a burning building to cause people to take damage. They want walking through a fire to, well, burn. They want stress to be inflicted and Consequences suffered.
For those people, Aspects aren't the answer. Which was my initial point. For those people -- and sometimes I'm one of those people -- environmental damage is the answer.
Really, to get back to my thesis regarding Fate in general, there's a sliding scale.
Some people want all Aspects, all the time. Hell, I wrote an Aspects only version of Fate which literally features no stats of any kind that are not Aspects. (Okay, there's a Stress track, but that's really only to time the arrival of Consequences, which are after all Aspects.) For such individuals, it's totally fine that the fire does nothing if fate points don't change hands.
On the other end of the spectrum, there are people who would prefer to have more traditional systems with some storygame stuff on the side. Their fun really needs the fire to burn, darkness to make hiding easier, etc. Fate points changing hands for baseline stuff like this kills it for them.
And, of course, there's the representative portion of Fate players falling somewhere in the middle.
So, when you say that there's a particular right answer (and I'm not necessarily saying that you are right now), you cut out everything else. Saying that you should always use an Aspect cuts out everyone who would have more fun with an environmental hazard. Saying that you should always handle it with an environmental hazard cuts out the people who would have had more fun with Aspects. There's room for both, and it really comes down to personal decision.