By the rules as written... An instantaneous spell takes no time and can be cast in any round without disrupting other actions except for spellcasting. If your declared action was casting a spell and someone attacks you, it then depends upon who won initiative.
* If you win initiative, your spell was completed before the attack, therefore you can cast bladeturn after your other spell, but still in the same round and block the attack.
* If your foe has won initiative, you cannot cast bladeturn unless you disrupt your spell.
If you are fighting in combat and wish to use bladeturn, officially you can use it once per round without negatively impacting your attack/parry in any way - even if you don't win initiative. Therefore it effectively gives you extra DB against one attack as long as your PP are available.
Personal opinion - I like to treat Instantaneous spells the same as I do Sudden Dodge. It allows you to do something outside your normal action, but it then becomes your action - either for that round or the following one. This way it maintains balance.
Rules as written...
Joe and Steve face off with swords. Joe is a far more experienced warrior with a +100 OB. Steve has only +20 OB, but he knows bladeturn and has a lot of PP available.
Joe declares an all out assault (no parry) because he knows he is far better than Steve. Steve declares an all out assault (no parry). Joe wins initiative and attacks, but Steve casts bladeturn scaled up to (-100) and Joe barely hits him. Steve attacks and has his +20 OB giving him a greater chance of landing a major wound and after 3 rounds has badly wounded Joe, but each round he continued to use bladeturn to prevent Joe from landing a blow.
Thom's version...
Joe and Steve face off with swords. Joe is a far more experienced warrior with a +100 OB. Steve has only +20 OB, but he knows bladeturn and has a lot of PP available.
Joe declares an all out assault (no parry) because he knows he is far better than Steve. Steve declares an all out assault (no parry). Joe wins initiative and attacks, but Steve casts bladeturn scaled up to (-100) and Joe barely hits him. Steve used bladeturn and therefore cannot attack this round. Steve wins initiative and attacks Joe, landing a solid blow. Joe retaliates again attacking all out (no parry) and Steve decides to cast bladeturn. Joe's attack is turned aside, but Steve's already used his attack for the next round so Joe's attack is a killing blow and Steve is dead.
In other words, I've got no problem allowing instantaneous spells to stop that one attack, or deflect the one arrow, or allows him to land without issue.... I just don't like giving it to him as an extra free action during any round as long as he has PP. It should either replace his action that round, or count as his action for the next round. He could continuously use bladeturn to repeatedly defend himself, but in that situation he really shouldn't be able to attack - but that's just my personal opinion.