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WLFobe

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Do damaged ships degrade in their abilities as their damage build up? For example, I've got a ship with 94% damage. I can send it all the way home to repair. Or I can send it off to join the bombardment of a planet I'm planning to invade.

If the bombardment is at only 6% strength, then it's better to send it back.
 

General Retreat

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No change in it's damage output, nope. A ship will continue to work at 100% efficiency until the moment it dies.

Part of the reason why focus fire is so important when considering weapon synergies. You can out-DPS the hell out of the enemy and leave their fleet a mangled wreck, but unless that evenly spread damage actually translates into kills, you'll still lose the fight.
 

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There is one minor effect: Damaged ships have a much higher chance to be lost during emergency FTL from out of combat (I asume the chance to survive is "remaining HP percent").
And that is additionally to the 20% max HP damage they take, wich could also kill them.

But they deal full damage and participate fully in bombardments until they are destroyed.