It would be nice if there was the ability to 'billboard' distant models - ie; beyond a certain range, models are represented by a 2d 'sprite' of sorts. As you get closer, they switch out with their relative 3d model. Something like that combined with soft particles would be a good workaround. The only problem is that I have no idea how to do the 2d sprite and account for 'angle of attack', ie; what angle the player is approaching it from. Either you'd need a LOT of sprites for all possible angles, or somehow make the ship model appear as a sprite viewed from the angle you're approaching it from.
Probably not the best solution for obvious reasons. The other option is to have models fade in to view gradually rather than just snap into existence. I'm sure that's a far more plausible workaround for any plucky coders out there, and it would probably be the most visually appealing method.
I'm not sure if increasing the render distance is the most elegant solution either, but it would definitely work.