Spell Deflection works on Direct Damage Spells....
There are really only 2 kinds of spell damage: periodic and direct
Periodic would be things like DnD, UB, Blizzard, all DoTs
Direct would be Fireball, IT, CoC, HB, AE
Sarth's and Maly's breaths are the only thing in the game that would be worth picking up this talent for at this time. Other than that its a filler talent.
Come 3.1 I cant see a good reason to spec for this. With the "nerf" to BB (nerf in that its an avoidance nerf) and the fact that no one should be gemming/gearing for parry, our parry rating will be like 20 to 25% which isnt enough of a proc chance for me to bother with (it isnt now really). I might use it as a filler talent if I was specing blood, but its either this or imp Rune tap and im pretty sure id rather have imp Runetap.
I cast the spells that make the people fall over.