but what you need to think about is what would be the advantage from a game point of view? having random engine failures just for the sake of random engine failures would only get players upset and make them quit the game. so it's a lose-lose situation for everybody.
midway
I'm willing to concede on the random engine failure point. I suppose that would take realism a bit too far, but I will not do so on the engine scaled damaging idea.
It might actually tone down some the 'fly till you die' mentality where people will stay engaged till they either go boom or are dropping to the ground like a brick, irrespective of whatever they are missing. As it stand right now:
Took 5 hits to engine, oil leak: I can fly for another 8-10 mins.
Took 5 hits to engine, radiator leak: I can fly for another 5-6 mins.
Took 5 hits to engine, no oil/radiator leak: I can fly till I die or run out of fuel.
I'd rather have: Took 5 hits to engine, no oil/radiator leak: Hmm, now do I stay engaged or head home.
Now I know that thats not what all the furballers would like, but it makes the game more engaging, more realistic and less arcade-ish.
That will pull in people rather than dispel them.