As i understand it following a collision both players get a message stating that the collision has occured - then the game works out whos fault it was and that person gets the damage
Your understanding is completly incorect.
1. There is no fault in a collision. You detect/see a collision you take damage. I.E. You fly your plane, you occupy the same space and time with your plane as a plane you see on your screen you take damage.
2. The other player has the exact same rules as you. He occupies the same space at the same time with his plane and any other plane he sees on his computer he takes damage.
3. Damage is termermined by which piece of your plane occupied the same space and time with other planes you see.
4. The other persons collision detection has no effect what so ever on your collision detection.
Lag has nothing to do with this detection prosses. All lag does is makes what each person see's (or more precisly the Time varible of (Space and time)) be bigger , hence the bigger the lag the more different each persons world.
This lag is not just one persons lag but wrather the sum of the 2 computers lag. Hence when any 2 people look at eachother. They are both seeing the same amout of lag.
The only lag effect has nothing to do with dection but can effect kills awarded.
This effect is if both people detect a collision at the same moment in real time. This normaly only happens in a head on. Each person then applies there damage to themselevs and notifies the host. If this damage killed the pilot a kill would be awarded. Since this notification takes time to get to the host. The person with the slowest connect would be awarded a kill. Because as far as the host knows, the person with the slowest connection still is flying a perfectly good airplane.
Now if you realy wish to raise your ping times just so you could be awarded a kill in the case where both of you decided not to avoide the collision in a head on. Go right ahead.
HiTech