In the 360 demo I shot at a plane and it kept flying but the enemy marker disappeared, meaning the pilot was dead. it did keep flying in a very straight line though, so I fired a extra load of bullets to make shure
and the PC IL2 did have headshots and body dhots, if hit in the body the screen would go reddish, and if you got shot in the body multiple times or once in the head the screen would fade to black...