I've been looking around the forums a bit and found some posts regarding damage decals...mostly about the fact that they're not entirely implemented and how their development is on hold due to some sort of issue.
Since there seems no interest to solve the problem, why not try to circumvent it? Instead of placing damage decals on the model, we could label certain polygons on the model as "fragmentable", so that they fall off when they are hit based on how much damage has been accumulated as well as the hull damage modifier on the weapons factoring in (i.e. much more likely to fall off at 10% hull or when hit with a trebuchet than at 90% hull or when hit by a morning star). Of course, if the modeller should flag polygons as fragmentable, they should create something underneath the fragmentable bits so that the player doesn't see through the ship they just tore up.
Perhaps this is best described through an image...
Okay, so here are three images of the same space ship (it could either be a fighter or a capital ship): #1 is how the ship would look brand new. Note that the darker gray panels are flagged as fragmentable while the rest of the ship will stay together. #2 has all the fragmentable bits removed, showing the model underneath (the green stuff). #3 would be the ship after taking a beating (and considering what little is left, it probably won't take much more punishment).

So...is it possible? I'm sure there would be some code changes, and I don't know how much the resident modellers would take to modelling some of the inner parts of their ships, but still...any thoughts on this?