My suggestion is simple. If your hull drops below 15% integrity then have a damage klaxon go off to warn you.

Some of my best memories from playing Wing Commander was killing a whole crapload of Drathi then limping back to the Tigers Claw with my ship all screwed up, alarms going off, displays all static'd and broken, and praying that there were no evil tiger people about to kill me before i made it back home.

Also... how about dropping engine output by 30% if your engines are red? or having your displays/HUD crap out on you if your cockpit is red.

You can institute 'Nano repair bots' that can (SLOWLY) repair heavily damaged systems until they are yellow again.

See that little localized damage indicator in the top right hand corner of the screen? Each area begins to turn red depending on where you are hit. It would be super cool if we had different kinds of system damage when one area of your ship turns red. If the engines turned red your thrust could be reduced, if the cockpit turned red the HUD could get all fuzzy etc. etc.

Phaserlight, thats exactly what i just said. =)

I'm a big fan of locational damage meaning something, but this would have to be carefully balanced, or you'd have a 'slippery slope' problem.. Where once you get to a certain point, it's increasingly hard not to get into a worse position.

maybe you could have it where if your engines go below like 5% you are incompasitated and you either need to eject or have someone come save you.

The locational damage was originally what the devs planned. They've beensaying that they might impliment it for a few years now. Maybe if all ~6000 of us bug them about it...