Anyhow, the more critical difference is that most naval combat simulations apply the amount of damage taken, as a percentage of the displacement, to all areas of the ship's operation in and after the battle. So for instance speed, attack, defense, sensors, range, number of troops would all be affected by a percentage equal to the perentage of damage taken against the total hit points.
Some naval combat sims also allow for 'critical hits' that remove certain systems entirely like a particular weapon mount or engine or say a construction or mining module etc.
But the point is that in GalCiv2 ships which are sitting at 1hp (and very kewelly shown on the screen as smoking and sparking) are just as lethal in attack (and just as fast, etc, etc) as those at full strength. This is something that does not seem like a big deal to implement, especially if you ignored the 'critical hit' aspects. And I would argue that it would improve the game albeit making a bit of change to strategy.
I agree that in terms of "realism," it might not make sense that a heavily damaged ship still has full attack power. But in my opinion, it's a simplification that's justified by the automated, pre-destined nature of combat in GalCiv.
If there was an across-the-board reduction in firepower as a ship is damaged, it might result in longer battles, and it could also change the balance of attack and defense you'd want for the ships. The devs (and most players?) seem happy with the current system, as far as balance goes. I like the way battles are resolved faster with ships retaining full firepower to the end. Real space combat probably wouldn't be a long, drawn-out affair.
If even more realistic, system-level damage was modeled -- say, one salvo might take out the engines, another might take out individual weapons, then the game would be adding tactical elements that we have no control over. It also adds some random elements, if the game is throwing a random number to determine whether the first crippled system is the engine, or a weapon. I don't think it's appropriate to add things like individual system-level damage that can change the tide of a battle, when the player (and AI) can't respond dynamically.
As long as the game doesn't include full tactical battles (which is a whole other argument that's been done elsewhere here), I think the focus should remain on battles being determined by comparing ship stats before the battle starts, and vastly simplifying everything that happens after that point.