Amazing how such discussions aren't unique to any one flight sim...if you're talking 20, 30 or 37mm cannons, they should be HE rounds...especially in the German planes (pretty sure some Russian too). Keep in mind that a WWII era sub 40mm aircraft cannon round did not have the same explosive impact that modern HE ammo has...still, one would think that if they can model 40 or 88mm ack properly in the game, it would be a simple matter to program that same modeling into the aircraft cannons to smaller scales.
Tracer rounds into fuel tanks and ammo stores should create a nice light show as well...just not on a frequent basis.