I have tried to use incendiary in the original game and even when aliens catch fire they seem to take no damage from the fire. I'd seen a reaper (supposedly weak to incendiary) take multiple hits from incendiary and then walk around for multiple turns on fire and still require a few AP rounds to finish it off. That basically means the incendiary didn't even hurt it, since it only takes a few AP rounds to kill it from full health.
More recently I made a 90 power rapidly firing small launcher with incendiary, and tested it against reapers. They definitely took damage. The first shot knocked a reaper out cold but that was clearly a fluke as further shots failed to cause significant damage to the reapers and no reaper ever died from incendiary alone no matter how many times it was shot. They also never caught fire.
In the original game, a unit passing a turn while standing in fire, if they were still standing in fire at the start of their next turn, they would be lit on fire. I only observed this once, but one of my own soldiers lost half of their health and gained zero fatal wounds during a single turn while on fire.
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I have noticed that several of the units have weaknesses or resistances and these are often mentioned in the autopsy reports. You can use this information to defeat some of the harder aliens with conventional weaponry if your weapons technology is behind the curve. There's just one problem:
. . alien . . . . weakness
cyberdisc -- explosive (despite its explosive resistance, this is the best ammo to use against it)
reaper -- actually explosive (it has no explosive resistance and is a 2x2 unit)
snakeman -- no weakness
chryssalid -- no weakness
muton -- explosive if anything (resistant to AP, low under armor)
silacoid -- explosive
celatid -- other celatids
ethereal -- no weakness
sectopod -- laser https:// slight secondary to explosive
The problem is that if it has a weakness, it is generally weak to explosives. Explosives can and will defeat any alien. AP will not always work, lasers are not always a good option, and plasma will not work well against sectopods. But you can win the game using only explosives. The only units that actually resist HE damage type are 2x2 units with low under armor, meaning you just need a bigger bomb.
I haven't played FMP yet but I was thinking the aliens need more variety in their weaknesses. There should be some creatures resistant to explosive that are weak to AP--especially armored units I think. AP stands for armor piercing, after all. I think I'm going to write up a mod like that.
Food for thought.