I think it should be done with cones, particles, trails and bitmaps for the full effect.
Cones: Short flames close to the exhaust, becoming faint rapidly.
Particles: Engine smoke, which is faint close to the exhaust, but becomes more visible further out.
Trails: Background for everything when on AB, could be also a contrail for regular flight in atmosphere.
Thruster Bitmaps: Glow around the engine (thruster flame could also be used as background for cones and partices, but it'd require an effect genius to pull this off).
Of course, not all of this may be fit for FS (especially smoke can look non-FSy).