You roll athletics not only to actually dodge, but also to make yourself less of a target. Finding cover, running around, stuff that would make it harder to focus on you. This would still apply to your "I set him on fire" spell, even if the narrative of the spell creates the fire directly at the target instead of throwing it at him. I would not create a fight will against will, that would seem inappropriate to me.
The trouble with damaging maneuvers that don't actually do damage is well known, I had to struggle with it, too. Up front: I would not let you tag your "on fire" aspect for effect to do damage. Otherwise any wizard would just maneuver anything to ashes, which is not what maneuvers are for.
You could tag it for effect, so that he has to put it out before doing anything else, probably rolling survival to do so. While he tries this, you are free to do other things. You might have a combo-spell, that you usually do, set the target on fire, then superheat that fire. Mechanically, the first is a maneuver, the second is an attack, tagging the maneuver for a +2.
As a whole, it is about how the fire effects the story, not how much damage it does.
The thing with demanding a fate point each round is just the way compels work, he gets compelled, so he either accepts it, or he pays a fate point. I would probably escalate this, if the player tries to buy out of it. Fire is fire, fire burns, you don't just run around when on fire.
Or The attacker could tag the aspect to make the target concede, so the fight would be over without any further action.
On another note: "on fire" is definitely not a consequence, unless you are suggesting, that the target remains on fire for a session or two.