This feature was implemented in a test build many years ago, but some unresolved memory issues prevented it from making its way into any release builds. It hasn't really been attempted since. The feature involved damage burn points pasted on a target hit by non-beam weapons fire (actually, I'm not entirely sure it was done for missiles). The system could only generate a limited number of decals and would remove old ones as new ones were generated. It also couldn't generate decals for beams due to the tendency of slash beams to "skip" across its target based on the FPS of the machine being played on.
Over the years as this feature has been brought up (but not worked on), the idea was suggested to use negative-elevation bump-maps to show a physical depression in the target. I have also suggested to combine what I call persistent impact explosions. Our current system is just some particles bleeding from the damaged area. I'm thinking something a lot bigger than that. My suggestion was that weapon impacts (if properly flagged) and subsystem explosions leave a large explosion that remains at this spot, but shrinks over time. It would also have smaller, persistent explosions around its edge that too shrink over time. After the fire burns itself out, it leaves behind a large damage decal. This is meant to allow modders to give visual evidence of a ship taking damage, rather than a few bleeding particles, occasional lightning, and a low hull-strength indicator.
I'm bringing this up since we've had a major release recently, so I felt it might get implemented this time.