A correction first: the whole Ray of Enfeeblement discussion is moot. The save is for Fort NEGATES, not halves. And with the DC four points lower than a 1st level spell, that is not going to be too difficult.
On to the meat:
I rule that any spell that can only affect a single target and has a range greater than touch can be chained. Rays, ranged touch attacks and the like are all fair game. Area effect spells clearly are not.
However, there are a few spells being batted around here which I do disagree with. Magic Missile, for one, does not *necessarily* affect a single target: it can affect up to five. The same applies for Flame Arrow. Spells such as Lightning Bolt, Fireball and such are right out, as they do not always affect a single target. Does this make the halve damage a joke? Not really. Most of the ranged save-or-dies have a Fort partial, so if the secondary targets make their saves then I halve the damage (I rule the damage, not the dice: otherwise you end up with silliness like 0dX). Melf's Acid Arrow and direct-damage rays would be other examples of halved damage to secondary targets. There are also a few weird ones like Choke, Ice Knife and Manaspear (R&R).
As for damage/other variable effects dichotomy, I tend to halve damage, but not other effects. Since the description specifies damage, I would assume that other effects would not be halved. Ability damage, however, being a form of 'damage', would be. Negative levels and boosting spells would be retained at full power (Chained Enervation is not nice).
The main use, of course, of Chain Spell is for nasty effects that are generally restricted to one victim. Transmutations and Enchantments are the usual preferred schools for chaining, with some Necromancy featuring, and of course the Power Words. Having said that, if you have a Rod of Greater Chaining, Maze is a very good choice indeed. With a party of disparate Intelligence scores and different rolls for time taken to escape, you can prepare and slaughter your victims as they make their way out one-by-one.