No one takes any damage, since Sith Alchemy doesn't say that the character takes damage, just that it's defeated. Jar Jar obviously isn't defeated, and therefore you don't get a Rakghoul.
As for where the Alchemy goes, there is some precedent in the FAQ:
Quote:
Q: What about a similar situation with a character you can't normally affect, say a Droid when using Thud Bug, or a character with Force Immunity when using Force Lightning?
A: You still wouldn't be allowed to affect them even if you can redirect to them if there are additional limitations outside of those related to targeting.
So you wouldn't be able to send it to anyone with more than 20 HP. So it just fizzles, just like if you target Jar Jar with Force Lightning and he's only surrounded by Force Immune characters.