Would Dancing Lights, when commanded to stay a foot in front of the eyes of an opponent, Dazzle that NPC? Since Dancing Lights can be the brightness equivalent of a torch, and the brightness of a torch up in my grill sure would dazzle me, seems reasonable the opponent would be Dazzled.
Sure, sounds reasonable. Be aware this is a conditional ruling you are making as a GM and not any part of the established rules, but it's a totally reasonable ruling and even consistent with applications of the light spell in early editions of D&D. But it doesn't sound like you think this is RAW or that you are playing a RAW game and in anything but the strictest of RAW games this is completely reasonable. You might require a ranged touch attack to 'hit' with it (otherwise the spell just hits the square, not the can only do this while your opponent isn't moving around so much that it's impossible, opponent's eyes, or something), or you might allow a Reflex save, or you might say you and any opponent in combat is definitely off-limits, you might do any number of other things. But what exactly you do with it is up to you and will have no discernable effect whatsoever on game balance. I mean, really, dazzled is:
The creature is unable to see well because of over-stimulation of the eyes. A dazzled creature takes a –1 penalty on attack rolls and sight-based Perception checks.
which is basically worthless. Yes, attack rolls and Perception are important. But -1? As an AoO provoking standard action that also tells everyone you're the spellcaster? Not the best thing you could be doing with your time.
Plus, the effect makes sense with the condition and rewarding creativity is always good. I'd recommend allowing this in any but the strictest RAW games.
Dancing lights is a 0 level spell, with a useful effect similar to light. While there is another 0 level spell called Flare which does cause the dazzle condition, Flare does not provide any meaningful light. Since the spell as described doesn't say it causes the effect, then there's no desired effect.
Ferring is correct.
However it would be entirely reasonable for a GM to allow you to dazzle a creature if you made a dirty trick combat manoeuvre with the Dancing Lights (which would still be a standard action as per Dirty Trick). As a GM I would also allow you to blind the target if the targeted creature had Light Blindness or Light Sensitivity (note that without such a combat manoeuvre generally even against creatures that have those vulnerabilities, Dancing Lights still has no innate effect - as it doesn't count as producing 'bright light').
The text for Dirty Trick says what is or isn't allowed is up to GMs, but this fits well within the manoeuvre's specification.
"You can attempt to hinder a foe in melee as a standard action. This manoeuvre covers any sort of situational attack that imposes a penalty on a foe for a short period of time. Examples include kicking sand into an opponent’s face to blind him for 1 round, pulling down an enemy’s pants to halve his speed, or hitting a foe in a sensitive spot to make him sickened for a round. The GM is the arbiter of what can be accomplished with this manoeuvre, but it cannot be used to impose a permanent penalty, and the results can be undone if the target spends a move action. If you do not have the Improved Dirty Trick feat or a similar ability, attempting a dirty trick provokes an attack of opportunity from the target of your manoeuvre.
If your attack is successful, the target takes a penalty. The penalty is limited to one of the following conditions:
blinded, dazzled, deafened, entangled, shaken, or sickened.
This condition lasts for 1 round. For every 5 by which your attack exceeds your opponent’s CMD, the penalty lasts 1 additional round. ..."