I'm with you on that part, Loon. I would love to see graduated damage. One of my favorite parts of the game is to be in the heat of a fight, to hear and feel the bang from damage (I love force feedback), and if death or a quick trip to the ground don't occur, to check my damage list and see how much trouble I'm in.
The decision to stay and fight or RTB adds to the immersion of the game, so graduated damage would be a benefit. Parts that are damaged but still partially operable could be listed in yellow. Heck, holed fuel tanks, radiator leaks, and oil leaks should already be listed in yellow, as they're only on their way to being useless, not all the way there yet. Once your engine finally seizes up or your tank runs dry, then the damage is listed in red.
The same could be true for partially damaged control surfaces, for example. If your aileron gets shredded but is still 50% effective, it's listed in yellow. Furthermore, if you don't RTB but choose to stick out the fight, and pull too many Gs, then you can rip it off entirely. Then it would sort of be like your aircraft saying "I told you so."
I'm also against micromanagement, but I don't see this system as being any more distracting than the current damage system.