To respond:
"How the hell do bullets manage to hit in the precise locations on moving objects we manage to do?
Such as shooting a wing off.
Wouldnt the bullet rounds and what your aiming at be subject to the same lag?"
The way I understand it, when you shoot the plane on your "front end", your system registers the hit, and sends that hit result to the other users "front end". This can take some time. Before reading these and related posts, I used to get very upset because of times where someone would fly right by me, appear to have missed, then suddenly my wing comes off. I thought before it was some kind of "aim cheat" allowing him to hit me even though he was pointed away or already past. Now I realize it is a result of the "lag time" between when I perceive he has passed and missed, and my system receives the data that he perceived a hit.
"It would seem to me that if bullet hits can be modeled into the game correctly. then so should collisions."
But if you view the very informative picture above posted by Donzo, you see why you can not model the two systems (shooting and ram) exactly the same. Donzo did not see a ram. Donzo received no damage. On the other person's front end, he did see a ram. He received damage.
I personally would not like it if I avoided a ram only to have it happen a quarter second later anyway only because the other guy "saw" it. You can not avoid such a situation as I described with gunnery (otherwise no one would ever hit ANYTHING), but you can make it so that no one receives a ram when he didn't "see" it.
"So-and-so collided with you and you die even though he looks to be 200 ft away" would not be an improvement IMHO.
I should also add that the delay I am referring to (he's already passed, and NOW I feel the hit) used to be a common occurence for me while I was playing via a dial-up service. Since I got DSL the frequency has seemed much less, I am assuming due to the much more efficent data transfer.