Yes, It does go both ways, Unfortunately.
Last night, I attacked a LANC and took 3 - 4 pings at the last second. The LANC went down and I had no visible damage.
The ping sounds were the less severe sounding, so I kept on flying looking for more kills.
After a while, I attacked a low N1K and got the kill, but on my zoom out, I looked back to see an F6F trailing me. He was at 1.1, so I wasn't very worried. Just as I started pulling away to 1.2, I saw tracers coming from the F6. One ping and my entire right wing blew apart and I went down.
So back on the ALL or NOTHING Damage model. If my P-51's wing was so close to falling off, I should be able to look out the window and see all kinds of bullet holes, or at least some way to tell I have been damaged without having to wait until that one last lucky bullet takes me down.
We need more damage model indicators HTC... Please.