I dunno, I kinda like the current system. I don't even mind the apparently small number of bombs and shells needed to sink a ship.
The reason I feel this way is that the most striking thing about studying naval history is that relatively very few engagements were really decisive. What usually happened was 1 side gained a slight advantage, got a few hits on the other side, and that side promptly ran away. IOW, usually you didn't have whole fleets getting wiped out. What you usually had was a few ships sunk and a lot of ships get damaged and fleeing combat.
Also, relatively minor-seeming hits could have a big effect on overall ship effectiveness. They might not let in enough water to sink it, but could take out various control systems, start dangerous fires, etc., effectively knocking the ship out of action.
So look at AH like this: Sinking ships in AH really doesn't mean they actually sunk in real life. Instead, it means they got damaged enough to run back to base. This happening at a far lower level than required to sink them, it seems reasonable to me that such ships should be fine until "sunk" in AH, and that relatively few hits be needed to achieve this.
-Bullethead <CAF>
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