This is a work-in-progress, so I'm not going to have anything finalized here. I'd just like to think out loud about it here and see what ideas come to mind.
How can I alter Radiation to fit?To start with, the effects of radiation on page 436 of the Basic Set probably don't work for Contamination. In most other systems I'm familiar with, the effects of magical or chaotic influence tend to be physical mutations. So magic should work more like B-movie radiation. Lets's look at the conditions one at a time.
A: Radiation burns and chronic somatic damage: this level actually could work, so I'll leave it for now.
B: Hematopoietic syndrome: Seems less appropriate. It's pretty severe, and so any replacement should be also, but maybe not as bad. I'm thinking of this in terms of heroic fiction, so the way it works in something like the Fallout games is probably more the direction I'd want to head in. This is probably the level where permanent magical transfiguration should start coming into play. I'm thinking things like arms becoming tentacles, gaining a goat's foot, or something like that. The permanent loss of Magic Resistance or gaining levels of Magic Susceptibility would also work.
C, D, and E I'll have to think about some more, as they're pretty accurate to radiation sickness and therefore terrible for heroic fantasy. I can say that the end result of dying from Contamination should likely be rising as a type of undead, probably one inspired by the old Juju Zombie from AD&D.
Where do you get Contamination?
Normal Mana would have a typical background level that doesn't normally damage unprotected humans. It certainly seems like higher mana areas should be more dangerous. Even Very High Mana shouldn't kill you outright, though. Maybe treat it as Cosmic Rays (1 rad/week)? The Underdark and other magical realms seem like they should be as bad even without higher mana levels.
Raw Magic (from Thaumatology) should certainly carry risks, though the Hazardous Materials (Magical) skill would allow you to block or mitigate the effects. Processed Raw Mana should be safe.
How can you protect yourself?
Magic Resistance should give protection, either as PF or as a bonus to HT rolls to survive. Maybe both. Lead and antimagical materials would also make sense.
Other things to consider: inanimate objects, magical sprits, alchemy, and that sort of thing. Can Sacred Architecture create a protected space? Seems like it would fit. I think I'll come back to this in a week or two and post what I've come up with.