now, back to the fire falcon:
Here is the original relevant combat section text from second edition:
Larger creatures, like men or horses, are generally attacked first at long range, in an attempt to drive them off. The ranged attack of a fire falcon is to discharge two highly flammable spheres from its wingtips in the general area of the intruder. They explode on contact with anything, doing 1-6 points of damage (no save, but magical fire resistance halves the damage) to all in a 10' radius. Thus, it is not necessary for the fire falcon to make a successful attack roll in order to damage a party. Each fire falcon can make this attack four times per day. If the sphere actually hits an adventurer, or their mount, the burning substance sticks to them, doing an additional 1-6 points of damage in the next round, and 1-3 the round after that, before going out.
Note also I screwed up on one detail: the flames were only supposed to stick on a direct hit anyway, so no TPK with a single hit.
As you can see, this tactic is meant to scare away intruders more than it is to decimate a whole party. I did not completely reflect this in the writeup for the CC version, but I can change that. Still, I take it that this is way too much damage for a party of 1st-level adventurers to take, so either the damage needs to come down, or the CR needs to come up.
If the damage is coming down, I can make it more like alchemist's fire, as follows:
Flame Spheres (Su): Four times per day, a fire falcon can discharge a pair of highly flammable spheres, one from each of its wingtips. Treat this attack as a ranged touch attack with a range increment of 10 feet and a maximum range of 60 ft. When a sphere hits anything, it explodes in a 10-foot-radius. A direct hit deals 1d6 points of fire damage. Every creature within 5 feet of the point where the sphere hits takes 1 point of fire damage. On the round following a direct hit, the target takes an additional 1d6 points of fire damage, and an additional 1d3 points of fire damage on the next round. If desired, the target can use a full-round action to attempt to extinguish the flames before taking this additional damage. Extinguishing the flames requires a DC 15 Reflex save. Rolling on the ground provides the target a +2 bonus on the save. Leaping into a lake or magically extinguishing the flames automatically smothers the fire.
Or, to keep it more in line with the original ability (which I like better):
Flame Spheres (Su): Four times per day, a fire falcon can discharge a pair of highly flammable spheres, one from each of its wingtips. Treat this attack as a ranged touch attack with a range increment of 10 feet and a maximum range of 60 ft. When a sphere hits anything, it explodes in a 10-foot-radius, dealing 1d6 points of fire damage to everything in the radius. On the round following a direct hit, the target takes an additional 1d6 points of fire damage, and an additional 1d3 points of fire damage on the next round. If desired, the target can use a full-round action to attempt to extinguish the flames before taking this additional damage. Extinguishing the flames requires a DC 15 Reflex save. Rolling on the ground provides the target a +2 bonus on the save. Leaping into a lake or magically extinguishing the flames automatically smothers the fire.