Love the idea of visible damage and would be in favor of it. It's becoming pretty common in all sorts of games.

That said, Star Control always quantified ship health as "crew remaining" which makes partial sense, although I always thought it was peculiar that the ship remained in perfect working order even if only one crew member was remaining. It's too early to know whether they will maintain the "crew as a health indicator" dynamic or do something different. I'd really like to see something added to this.

I personally think there should be two metrics, hull (or shield) strength and crew remaining. To do a simple analog comparison of the idea, think of Doom where armor reduced incoming damage to your health. Hull strength would reduce the amount of crew you lose to an attack, while crew remaining would reduce the functionality of your ship similar to how you described. As you lose crew and/or parts of you ship, perhaps some features of the ship are affected (e.g. firing rate, turning rate, engine speed, etc)