A "cloud" like grenade effect (whether it be acid or gas or whatever) that lasts for a period of time that wasn't abusable is certainly not a bad idea.
The area effect weapons tend to discourage camping small rooms out and can force changes in tactics by position control, which is good, but overkill in that area would be bad news. Linking it to a slow build effect like poison or radiation would be for the best IMO as it isn't direct health damage and as such it won't accumulate with other area damage weapons into overkill.