Here is a really rough guide for anyone wanting a similar ‘look’ to the current damage textures.
First, I did all this in paintshop pro, but photoshop is very similar…
I created a new layer underneath the ships hull called flames.
I created a layer above the hull called outline.
Using either the lasso tool, or the eye-dropper tool, on the ships hull layer, i selected a bunch of areas on the hull to damage, by drawing out some rough shapes, or selecting areas with the eyedropper that seemed like natural places to have holes. I then saved this selection to a new alpha channel
I then expanded that selection by a few pixels (maybe 2 for cruisers, maybe 4 for fighters).
I then flood-filled all of the expanded areas on the outline layer with black.
I then set the outline layers blend mode to ‘darken’
Then, I load in the original selection from the alpha channel, and delete that selection from the outline layer, so I now have black outlines.
I then delete that selection from the hull layer, so it has open holes down to the empty flames layer.
Then I add a new layer on top of everything called blur, set to ‘darken’ blend mode.
Then I load in the selection again, this time expanding it even more, maybe 6 or 8 pixels.
Then flood fill that bigger area with black.
Then do a gaussian blur on that layer, so that it creates a nice big black splodge around the areas, fading to nothing.
Then load back in the original selection yet again and delete it from the blur layer, so again we have holes, but now we have nice fading black gradients from them.
Then I open up a source file for the flames and internal damage in a new document. I used a highly modified contrast and color enhanced picture of an oil refinery at night, but pictures of explosions are also cool. I used the clone brush to basically ‘paint’ this texture onto the bottom layer of the image (flames) so it appears just inside the revealed holes in the hull.
Finally, I would clone-brush individual pixels from a really bright explosion onto certain areas of the flames texture, to give them better highlights.
Sometimes I’d then make a really patchy scattered black brush, and just blap a few times over the top of the damaged areas (and remove the selection areas from this splatter layer as before) in order to add some sort of minor ‘power-burn’ style stuff onto the ship.
Of course, proper artists can probably do this faster and better, but it’s how I did it