No, as written there is one and only one interpretation which actually follows the rules, and it requires no "interpretation".
That sentence makes no sense, and contradicts itself.
This spell creates a spinning disk of blades. These whirl around a central point, creating an immobile, circular barrier. Any creature passing through the blade barrier takes 1d6 points of slashing damage per caster level (maximum 20d6). The plane of rotation of the blades can be horizontal, vertical, or slanted.
Creatures within the blade barrier when it is invoked take the damage as well. They can negate the damage with a successful Reflex saving throw, provided they can and do physically leave the area of the blades by the shortest possible route. Once the barrier is in place, anything entering or passing through the blades automatically takes damage.
A blade barrier serves as one-half cover (+4 AC) for anyone beyond it.
Maybe I'm missing something, but where does it say, implicitly, that you take damage from standing still in successive rounds? For example, an individual who failed the save the first round, and therefore still in the area?
Reinterpreting the spell, especially when you have to say "logically", or some other pseudonym for "realistically", is house ruling it. Certainly assuming the extra words "within one round" is house ruling it. Therefore you can't really be surprised when your own alterations to the rules have unintended and downright broken effects. Why don't we all just use the shrink item-plate of steel smackdown while we're at it?
It wouldn't be an alteration of the rules to look at what they say literally, and act in that manner. You are assuming that damage is taken for standing still within the 2nd round and other rounds. It is not stated.
Nor did I ever state I was suprised "the spell had unintentional consequences" since we've run it this way in 2e as well and are well familiar with it. Nor did I state it was broken, in fact I think the spell serves the purpose of a barrier quiet effectly. Since I'm not familiar with the particular smackdown you mention, I can't really reply to that part.
The spell is intended to prevent access to an area, and as a gimme can also be used in a limited fashion as a direct attack spell. That's it. Forcing your opponent to stay within it for more than a round does not cause him to be annihilated, unless he has no way to leave the barrier.
Actually, the spell isn't intended to prevent access from an area, as it doesn't stop movement that avoids it's plane of rotation. A Wall of Force prevents access, blade barrier is intended to damage those that pass through it, pure and simple. That isn't prevention, that is deterant, a quite different concept.
Forcing your opponent to stay in a blade barrier has zero effect looking literally at the text, after the initial damage for failing the first save. Assuming you take damage for standing in it on successive rounds is (again) not stated in the text. Basically, the blade barrier is created, person in it fails the save, and as long as he stands still in it, by the literal wording of the spell, he takes no further damage.
In fact no where in my post did I mention an opponent could be annihilated, nor the penalties nor tribulations for being unable to leave the barrier, I only spoke of already being in it.
Now, to quote myself again:
Actually, as written, either interpretation is valid. On the other hand, assuming one person is wrong because you don't agree, and saying he's wrong, is silly, and saying yours is the one true ruling without any backup would qualify as a house rule.
Again, please provide proof your interpretation is the only accurate valid one by the letter of the spell, and/or possibly by rulings from the Sage. Until then, there is no one definiative answer, nor one person who is right, and saying your's is right and no other could be is not a valid statement.
. But a rational reading simply says that if you stand about in a blade barrier you are going to get diced.
