Due to internet lag, from what I understand it is impossible for both pilots to see the same thing at the same time. When you see the other pilot, you aren't actually seeing where he is, but where he was a moment ago. If you see a collision, he likely won't, as he has already flown through that point while it was unoccupied by you. He likely see's you miss by several hundred feet. Since he saw a miss, but you saw a collision, you take the damage.
The plane you see is really more of a "shadow" so to speak. Almost like a banner of a plane dragged behind the plane. You never really see him, but rather his bannor. You manuever against his "bannor", and shoot at his "bannor", not actually at him. So if you fly into what you see as "him", he see's you fly through the space behind him. He see's that he has successfully avoided colliding, and is rewarded for that by taking no damage.
The spacing between the other plane and his "bannor" would vary depending on lag, speed, and angle. You would see the least space between the other plane and his "bannor" if you where flying the same speed as him, and going the same direction. However, if you where flying directly nose-nose, you should see the greatest distance between the other plane and the "bannor".
Bullet hits are not modeled to require both pilots to see hits for the "shot" plane to take damage. Only the "shooter" needs to see his bullets hit the other plane for damage to be awarded. Basically the opposite of how collision damage is awarded.
Remember, it is impossible for you to see the actual other plane. You are shooting at his shadow. Hit his shadow, and he will take hits, even if he thinks/sees you shoot behind him. If it were required that we both see hits or collisions for damage to be awarded, we would NEVER be able to hit each other. Sometimes both planes will "see" a collision. Both take damage then. Even then, though, if you see a collision that should damage his nose, he'll likely see damage against his tail from his view. Or a different part of his plane. NOT the same thing you see.
Maybe this is not what you would consider "ideal", but it is the only way to make a game like this work. Is it consistent? Yes. Our computers are not making random choices as to when damage is awarded, and to whom. They are following rules based on programing. If you see your bullets hit him, he takes damage. If you see a collision, you take damage.
Basically, when shooting at the other guy, be happy that when you see hits against him, he takes damage. Because in actuality, you missed by shooting behind him. And when it comes to collisions, simply avoid hitting the other plane. You only take collision damage when your computer sees it, so it's your fault. Even if you see the other plane hit you.
MtnMan