How are vanilla (call/put) options on CMS spread quoted on the markets ? Through an implied (normal/lognormal) volatility with a normal/lognormal model on the spread in the forward measure ?
Here is a quotation from an interbank broker last week: 1Y 2-10 Str 26-27. This means that a one year at the money straddle on the (10yr cms - 2 yr cms) has a spot price of 0.26% bid, 0.27% offered. So, they are quoted in price terms , not volatility.
To value the above option, most traders would use the volatility of 1y-2y and 1y-10y swaptions , and a correlation between those forward rates. This produces a normalized volatility for the spread, which is then used to compute the value.