The damage is displayed currently where your ship will be poked full of holes, look at your ship AFTER the glowing/melting has cooled off. You'll notice some deep black cracks all over.
I'm personally a fan of the melting, but I think it's not good enough ^.^
just as a personal choice, I'd want melting to be more of a energy weapon damage only, and say high explosive lots of smoke and shrapnel, and kinetic will be bright sparks, just to visual that your getting hit by different damage types.
The melting effect also needs a bit of.. acceleration, or how should I put it, I want it to glow more, but not only when the armor is about to be completely destroyed, I want it to glow bright as heck even when there's still 85% armor. But also to have it "cool off" faster,
I kinda think that the current damage modelling system is good, but it does have limitations, have a large enough ship and you'll noticed they'll die from pretty "localized" damage, I'm thinking why not spread that damage effect around when have reached a certain threshold, say at 75% hull, you'll get random "damage burns" applied over your hull ( either only cosmetic or actual game play affecting) and 50% they become much pronounced, and when your near 10% you'll pretty much be looking like how you would be after a ship explosion.
It's sort of a homogenization, to make damage that's been critically inflicted in only one area show up relatively affecting your ship in widespread,
Or you can take out the random damage sprite, and sort of, propagate it deeper into the hull.
