I am also in the camp that thinks CR would be improved by a degradation of performance rather than straight up disability. If you have high CR, your weapons do more damage and your ship moves faster, your system abilities recharge more quickly, your shields are more efficient and raise quickly, and your armour better at reducing damage. If your CR is low, your systems are overstressed. Your weapons have their damaged reduced, repair more slowly when broken, your engines crap out in a stiff breeze, your armour is loosened by constant stress, your flux overcharge bonuses are lower, EVERYTHING should suck more. If you have none, firing your weapons breaks them half the time, your systems repair so slowly you are easily made helpless, your ship abilities are crummy, your shields raise slowly, etc. If it is a combat variable, it should rise or reduce according to CR.
It might also be good to have a timer at the beginning of a combat so that ships newly entering combat don't suffer CR loss if the battle abruptly ends. Taxing your systems to their limit to survive would wear things down, but just showing up for a few seconds seems a little underwhelming for a full CR hit. CR is fun, it just isn't fully fleshed out yet. As a core mechanic, I think it is very solid.