I know how to use cs weapons in Multiplayer, it is a very simple fix.  Remember most people do not fly detect crash on.  It is in your realism settings.  If to objects collide they will end thier flight.  Well cs weapons are in fact a flying object.  problem solved.  If you would like to test this out have a friend fly with crash detect on and see what happens.  On another note if both players have csweapons they will also see the incomming missle.  other wise the sys will default to whatever it can match up, i.e. flying helo's.

Though in Free Flight not, Multiplayer with CS Weapons is absolutely doable
in FSX Multiplayer Missions.

The ability in MP Missions to declare attached to participating Players areas
that when a SimObject CS Weapon enters triggers by proximity events (ie,
Aircraft Failures of different kind & type), makes that possible.

Type of damage taken depending on impact point as also the weapon type is
also highly customizable. For example, speaking about F-18 :

Each paricipating F-18 slot, may have 6-7 attached rectangular areas of different shape & size
as follows :

- 1 small cubic centered at cockpit
- 2 "lengthy" rectagular for the 2 engines
- 2 smaller for the ailerons
- 1 small cubic for the central fuel tank
- 1 or 2 for the elevators

Entering of  a "Vulcan Shell" SimObject fired from another player in any of these areas,
triggers different type of Systems Failures like : Oil leak, Engine Fire, Ailerons or Elevators block,
Killing of the pilot (all control surfaces blocked & maybe triggering of an external camera pointing
at the sky or even a graveyard...), etc.

Settings must be : Collision detection off (since areas will trigger the failures) and also at csweapons.xml, <efficiency> must be set to 0, ie weapons dont do damage (same reason).

The drawback is that the player that suffers the damage can see the visual effects (if there are any, like engine fire) but not the other players.

Working Flares are also easily possible (& serve as chaff as well) : just an invisible simobject with
<fxwake> declared a flare effect. Lifetime, drag coeficient & gravity must also be edited with proper values. Thrown through "Rocket Launcher" with 0 initial speed.
Purpose is to "block" the pursuiter's IR Seaker with more Simobjects than just your plane, BEFORE he locks at you ! Giving you thus the opportunity to brake his lock by manouvering away.

Scenery Object destruction (Buildings, vehicles, Ships, whatever) - not simobjects - is also working based in same principle above (weapon proximity to an area), especially the Static ones (for moving, there has to be an attach_point in the object for the Effects to bind upon). In this case, all effects & destruction can be viewed from all players !... Unguided weapons, need nothing else, while Guided weapons demand also a small SimObject hidden in the Scenery Object for the CS Weapons to lock and trigger FX & destruction with proximity to the object.

Now for the Free Flight : I know there are Effects in Free Flight placed as Scenery Objects that being triggered by player/s approximation (eg, the Flak effect). So a similar type of Mission .xml code can exist also in Free Flight, but I don't know anything else about this. Since Effects can be attached in player/s aircrafts (even with the smoke system...), some of the above described may also work in Free Flight...