A while back I was dogfighting a 109 1 on 1, neither of us had taken damage. As I watch him pass by on a perpendicular course about 200yds off my 6, he sheds a wing and goes down. I asked why and he said collision.
Turns out he was in Sweden, and with my 56k connect we had some serious lag between the two of us. So while he saw a collision on his FE, I never saw him closer than 200yds on mine. If both parties always die in collisions, my plane would have just fell apart for no apparent (to me) reason.
The way it is now, if you fly into an ememy plane on your FE you die. Avoid him and you live. The same rule applies to the other guy too.