Designing "damaged" mechanical parts


So we're designing a game that is kind of a mash between Airships Conquer the Skies and FTL.

And one thing that is really puzzling me is how we should indicate ship damage to a particular part.

1) One way is to show effects like smoke, although this may clutter the battle zone. Maybe we could add very light effects or something

2) Another way is to do some kind of shader/surface voodoo to cut out pieces of the part (which I think ACS does), but this doesn't make much sense in our game since that would indicate a massive ship failure because of a hull breach in outer space. Maybe we'd "cut out" electrical hardware?

3)Another way is to image)blend with grey/black/red on the part, although we are allowing the player to paint their own color tint on the ship, and it might be confusing. Although I guess we could maybe combine the color with the paint color.

Anyways, just wondering if anyone had some thoughts on the matter.