In AH when the plane catches fire,it's a done deal..
Not always. Just the other day I shot up an A6M with .50's, his engine caught on fire, and I took him for dead (our altitude was about 1k ft). Instead, he quickly ditched
on water, and because we were in his territory, I did not receive credit for a kill.

I'm sure that A6M was salvagable...
I agree that it would be fun and more realistic to have more options during engine fires. That would require more complicated engine modelling in general, but not everyone wants to head down that road.
Finally, instead of death, you can always bail out when your engine is on fire.