These powers state "damage dealt to this character is reduced to 1". Now does that mean this is a damage reducing power? And if so, does someone with psychic blast go right through this defence. Some one please help me out with the correct answer!

As the power states, it reduces the damage. Therefore a power that generates penetrating damage (as per the glossary - "Damage that can’t be reduced by powers that reduce damage dealt.") Therefore, the special power would have no effect against the damage dealt.