The rules indicate that on a middling bad experimental botch, that the people in the lab take +level of the item being worked on damage. Not +mag, but +level. In almost all cases, that's fatal.
Is this supposed to be the case?
That does seem to be the RAW, and I agree it seems exceedingly lethal. Even if we're working on a low-to-mid level effect (say, lv20), a Size 0 character (like most) will be insta-killed by a roll of 1 on the Simple die (21+ damage = dead).
As Rob mentions in the comments, a prudent magus would ward himself magically before going into the lab. However, Lab activities aren't handled in tactical mode, like other activities the character engages in. There's no point in having the character remember to ward (against what, specifically?). This means that any sensible precautions should already be factored into the lab totals. This could mean having the character's Terram (for glass shards) or Ignem (for fiery explosions) modify his Soak score accordingly. Or perhaps the specific arts which are used for the experiment, under the twin assumptions that A) the damage caused is related to the nature of the experiment, and B) that a higher-level effect would be more deadly to a less experienced magus who doesn't know what he's doing.
I never noticed how overpowered this is. I guess this is because we rarely stick to the rules when it comes to wounds. I know they were going for more realism, but the wounding rules make almost any injury taken into a long-term buzzkill that keeps the character out of action for months.