The fire simulation isn't a placeholder, it was carefully researched and implemented over several months. This is not to say it's finished yet: it needs better integration with the engine thermals and eventually we'd like to see spread of fire from one car to another once lua variables can be exchanged between vehicles. If you want to see explosions you have to use physical beam structures - either precompressed beams (like the propane tank mod) or the pressure simulation could probably be used to approximate a shock wave. Visual fire damage is very complicated, at least as challenging as dynamic paint scratches, so don't expect to see it soon.
