While it's interesting to compare this spell to the 5th-level druid spell rejuvenation cocoon [conj] (Spell Compendium 172), I think a fairer comparison is to the 3rd-level Sor/Wiz spell permeable form [trans] (Lords of Madness 129).
Comparison to permeable form
The spell permeable form also has a casting time of 1 immediate action and for 1 round renders the caster incorporeal. While an incorporeal creature is not straight-up immune to magic attacks like a caster affected by the ice block spell, an incorporeal creature's typical 50/50 is close.
This means the 5th-level spell ice block must be better than than the 3rd-level spell permeable form… and, honestly, it's about right as two spell levels higher, an ersatz improved permeable form spell. For comparison, the permeable form spell can't be dismissed, so when the spell's cast its 1-round duration guarantees the caster is incorporeal for his next turn (and maybe a little longer), yet the permeable form spell's caster can still take actions during that turn when he's incorporeal! Like the spell permeable form, the caster of the spell ice block has two short-term choices:
Since "[u]sing an immediate action on your turn is the same as using a swift action, [sic] and counts as your swift action for that turn" (SpC 4), when the caster casts the spell ice block on his turn, at least until he can next take a swift action to dismiss the spell, he remains immune to magical and mundane attacks and can take no actions. He's in an invulnerable block of ice.
That's a reasonable, balanced effect. Being immune to magical and mundane attacks off-turn is awesome… except that it takes a 5th-level spell—and a caster typically only gets, like, 7 of those per day at most—and the effect leaves the caster encased in a block of ice. A Spellcraft skill check (DC 20 as it's being cast or DC 25 after it's in place) should be sufficient to realize the spell's effect—that attacks against the caster are pointless—so foes will either direct their attention elsewhere or take the ready action with the action Attack the iced-up dude and the trigger when he's not iced-up anymore. Presumably, the caster would know nothing of plans like the latter because the caster's encased in a block of ice. Further, the spell's casting and dismissal time means that the caster loses the opportunity to employ his swift and immediate actions on those turn for other things—like casting a spell modified by the metamagic feat Quicken Spell (Player's Handbook 98)… which, conveniently, becomes really useful about the same time that the spell ice block becomes available.
When the caster casts the spell ice block off-turn, for 1 round and until the turn after next when he finally has a swift action to take, the caster remains immune to magical and mundane attacks and can take no actions.
For example, after his turn that's on initiative count 20, Abe on initiative count 21 takes an immediate action to cast the spell ice block. Next round on his turn at initiative count 20, Abe can't dismiss the spell because he traded that turn's swift action for the immediate action he used to cast the ice block spell! So it's not until the round after that—two rounds later—on his turn on initiative count 20 when Abe can take a swift action to dismiss the ice block spell. That's a lifetime in a high-level encounter.
The difference between the spells permeable form and ice block is the latter spell's duration, which can render the caster immune to effects for far longer except that the caster can't take actions! This balancing factor—one of the game's most brutal—is sufficient for this DM to think the ice block spell's about right as a 5th-level spell.
Further details are necessary
The spell's author really must go into more detail about what, exactly, the spell ice block makes the caster immune to. Can the caster be grabbed and toted away? If the ground gives way beneath the caster, does the caster fall? Will the caster fall upward if the 6th-level Sor/Wiz spell reverse gravity [trans] (PH 273) is used on the area? Does the caster sink in liquids? Or is the caster simply immovable for the spell's duration? It's a 5th-level spell, so that means the PCs are doing crazy things; expect situations like this to arise. While the effects of incorporeality (like that provided by the spell permeable form) are far from perfectly described, there is no condition or special ability that's similar to being encased in a block of ice to use as a guide, so the spell's author must concoct these rules. There're darn good reasons why almost nobody uses the 7th-level Sor/Wiz spell statue [trans] (PH 284), after all.
Comparison to time buttress
There's another effect that warrants consideration. The 5th-level artificer infusion greater armor enhancement [trans] (Eberron Campaign Setting 109)—normally available at character level 11, so typically 2 levels later than the ice block spell—has a casting time of 1 min. and a 100 gp material component and for 10 min./level grants a suit of armor or shield (even a nonmagical one) that the artificer touches a magic armor or shield special ability that's either up to a +5 bonus or up to a value of 100,000 gp. That can include the magic shield special ability time buttress (Magic Item Compendium 15) (+5 bonus; 0 lbs.) that 1/day allows the bearer to take a standard action to
avoid injury by manipulating time. You are invulnerable to all attacks, spells, and powers (both harmful and helpful), beginning immediately after you activate the effect and ending at the end of your next turn.
So 2 levels later, an artificer can have a creature take a standard action to become—for the remainder of its turn through the entirety of its next turn—literally invulnerable and still take actions, a reasonable step up from the spell ice block.
Mitigating the impact
Although it doesn't seem to hew to the source material, a DM that's particularly wary of the spell ice block may want to allow it to be test driven by giving the created block hit points—maybe, conservatively, 5 hp per caster level—yet rule that the block's immune to all but fire damage. Then, if the block's hp are depleted, the spell ends, and the caster is dealt any fire damage that remains after the block's destruction. But bear in mind that a caster that casts the spell ice block could've taken a standard action to cast instead the 5th-level Sor/Wiz spell teleport [conj] (PH 292–3), and that spell's result typically renders the caster immune to mundane and magical attacks, too. Really, any defensive spell of 5th-level or higher must be a better option—with greater combat efficacy—than cutting short the encounter by just leaving.
I've DMed for a PC that often used the spell permeable form, and I didn't find that spell particularly unbalancing. I did find it useful to surprise the player occasionally with a monster capable of making attacks normally against incorporeal creatures—in much the same way the caster of the spell ice block may be surprised to find his spell ended too soon by a dispel magic effect—, but his incorporeality wasn't frustrating or unbalanced: I simply directed efforts that would've been aimed at his PC instead at his comrades. With that PC, essentially, sometimes not there to soak attacks, the rest of the party just took a greater beating.