I like both ideas, Bob, especially the faerie-fire one. Are you considering scaling the outline with the distance between the player and the target? I'd recommend, after the distance reaches a certain threshold (scaled outline or not) that the target become a simple circle of constant size. This faerie-fire/outline idea appeals to me.
[sidenote]what if there was a weapon effect that added the faerie fire to a ship, making stealth/cloaking ships targetable/visible?[/sidenote]
The 3d bracket idea might be a bit overwhelming, I think. This is a fine line though, and is probably a matter of what the targetting effect consists of.