First it is a spell, and that does matter. I can buy a spell triggering any kind of state because it is magic. Hwever it is also a condition. Personally i dont think the condition rulies of 3E are not perfect. So just because they exist in 3E, that doesn't mean I fully support them. Generally what I am okay with is certain things triggering certain conditions in rpgs if those things make sense. A daily or encounnter mundane power, should not do it though. Clear markers for needing to make a fear or panic check I am fine with though in certain games (drop half your hp in an attack, make a panic check, facing an opponent that seems twice as strong as you, make a fear check, etc). Still i think these thigns rub a lot of players the wrong way. Not sure they are a great fit for standard D&D. Personally i still think these kinds of things are best left up to the players and GMs to decide. If the game is being run specifically as horror, I wuld be more inclined to agree with fear mechanics outside of spells.
However, a fear effect that gives me control of another characters precise movement? Not a fan of such things.