I salute if at least one of the qualifications on my "salute" list is met, and provided the number of checks on a second "don't salute" list is lower than those on the first:
salute
1) it was an actual fight
2) I had fun
3) they gave me a run for my money
4) they fought as if the fight was most important, not the kill
5) they hadn't made a B-line for my 110 or P-40 (not just out for an easy kill)
6) they were skilled, and beat me because they were a better pilot
don't salute
1)they cherry picked
2) vulched
3) HO'd
4) were part of a horde
5) tried to hide in ack
6) rolled over and lawn-darted after the first tracers flew by
And a few exceptions:
1) I always return salute to someone I shot down, regardless of circumstances
2) I return salute even to horders and gangers if the fight lasted more than about 15-20 seconds, because personally, I think a salute is a sign of respect. If I flew well enough to earn a <S>, especially fighting 10-1, I give them the BOTD and assume they aren't trolling, or using it sarcasticly.